Wall Street’s main indices opened with modest gains, but then dipped lower
US stocks slid Thursday as investors digested comments from Fed Chair Jerome Powell, while concerns over Donald Trump’s presidency clouded optimism.
Bitcoin dropped below the $90,000 level after hitting a record of $93,462 on Wednesday.
Observers are expecting it to soon top $100,000 following pro-crypto pledges from the US president-elect.
Investors were looking to a speech Thursday by Powell for indications about future interest rate reductions, but his remarks cooled expectations of a December cut.
Powell told a conference in Texas that the path of rate cuts “is not preset,” adding that “the economy is not sending any signals that we need to be in a hurry to lower rates.”
The inflation data this week and the Fed Chair Powell’s comments today have pushed down the expectations of a rate cut in December, Ventura Wealth Management CIO Tom Cahill told AFP. That’s what’s troubling the market.
US consumer inflation data released on Wednesday showed that consumer prices increased in line with forecasts.
With Trump having vowed to impose across-the-board tariffs, that could boost inflation and give the Federal Reserve reason to pause cutting interest rates.
“As things stand, the market is cautiously pricing in just 50 bps of easing by mid-2025 – a marked revision from before the US election” when it expected more cuts, said City Index and FOREX.com analyst Fawad Razaqzada.
Meanwhile data released on Thursday showed upticks in wholesale price inflation, which could also give the Fed reason to reevaluate the need to lower rates further.
The higher interest rates, I think, are kind of acting as a headwind of sorts for the equity market right now, according to Patrick O’Hare of Briefing.com.
US’ main indices opened with modest gains, but then dipped lower.
European markets fared better, with updated data confirming the eurozone recorded 0.4% growth in the third quarter.
Tokyo, Hong Kong and Shanghai all declined on Thursday as concerns over another possible China-US trade war, and Beijing’s economic woes, weighed on Asian markets.
The dollar topped 155 yen for the first time since July, putting focus on Japanese authorities who have said they are prepared to support their unit if they considered moves to be one-sided or speculative.
