On Wednesday evening Wall Street experienced a sudden plunge, and as a result, the stocks of some of the renowned U.S. companies looked wobbly.
The recent bubble came due to the latest Feds talk, earlier this week investors were waiting for the reports discussing the Feds minutes.
As a result of all these uncertainties, Dow Jones Index soon the gain of 39 points.
As compared to Dow Jones, S&P 500 and NASDAQ Stock Exchange went flat. Since the start of 2023, the United States Federal Reserve has constantly been active.
This is the fourth time that the Feds have shown concerns about the future economic outlook, moreover, Feds officials also have disputed opinions about the rise in interest rates.
Previously, the feds have increased the interest rate by 0.25%. It is expected that they might increase the interest again in the first week of March.
However, this time interest rate might be increased by 0.50%. But the Feds minutes are yet to be classified for the investors.
Earlier This Week Wall Street Seen One of the Worst Days
Tuesday is regarded as the worst day Wall Street has experienced so far this year. As investors were unsure about the policy rate.
This uncertainty will only be vanquished once investors will come to know about the Feds’ stance on the economic future and the interest rate.
Rumors have already been that a further increase in interest rates amid the inflation fears is evident. As the result, U.S. stocks felt pressure against the stable U.S. Dollar.
Strong USD successfully brought the equity market to its knees. But, what will be the stance of the Feds officials for the time to come is still a question mark.
The recent economic data shows that the economy is still facing the fears of upcoming inflation despite the strong job creation.
Inflation will take longer than usual to cool off. On Wednesday James Bullard, one of the Feds officials stated that Feds need to adopt an aggressive approach towards interest rate hikes.
An aggressive approach towards increasing the interest will deter the devaluation of the U.S. Dollar, and as the result, consumer spending power will remain intact.
But this statement has had a daunting impact on the price of some of the biggest companies.
Bullard also proposed a massive hike in the interest rate for the upcoming week. Stock experts do believe the first week of March will be very significant for the market.
The market is expecting that the Feds Will Increase the Interest Rate
As we are heading towards the last week of February, economic experts have voiced that it is certain that the policy rate is going to rise.
As Feds will further tighten the monetary policy the interest rate can eventually be increased by 5% by mid-summer.
Earlier this year investors were happy that the Feds are finally done with the interest rate hikes and this will fuel the rebound of the stock market, especially the tech stocks.
But as the things stand, it can be argued that the stock market has once more found itself surrounded by highly unfavorable circumstances.
Stocks market fears have also been triggered by the arguments that interest rate hikes should stand longer than expected period of time.
As a result of these rumors tech stocks once more saw a massive plunge in prices. Commodities such as gold and crude oil have also seen a decline in prices.
WTI futures market dropped by 1.4% to $75.25 a barrel. On the other hand, Brent Oil Futures saw a decline of 1.5% and were priced at $81.84 a barrel.
In addition to that, Gold Futures rose by 0.2% and gold is currently being traded at $1846. The U.S. Dollar Index was also on the rise.
However, investors do believe that recession is their biggest concern at the movement, interest rate has only been hyped so investors might not be able to focus on the real issue.
It is expected that for the upcoming few weeks, the stock market experienced sluggish momentum in terms of daily trade.