(ABM FN-Dow Jones) US stocks closed lower on Thursday, as the dollar and US Treasury yields rose further after the Federal Reserve’s third massive rate hike in a row, further increasing the chances of a recession.
The S&P500 index closed 0.84 percent lower at 3,757.99 points. The Dow Jones index fell 0.35 percent to 30,076.68 points and technology exchange Nasdaq ended 1.37 percent lower at 11,066.81 points.
On Wednesday, the stock markets plunged much deeper into the red, following the Federal Reserve’s interest rate decision. As expected, interest rates were raised by 75 basis points, but the setback was in the so-called ‘dot plot’. Fed policymakers expect the key rate to rise to 4.4 percent this year. This equates to a fourth rate hike of 75 basis points in November and one of 50 points in December.
“We’ll keep going until the job is done,” chairman Jerome Powell said in a press conference to explain the interest rate decision. “I wish there was a painless way to do that. There isn’t one,” he added.
Powell “did his best not to mention a bright spot at the press conference,” said Christian Hoffmann of Thornburg Investment Management in Santa Fe.
On Thursday, central banks in Switzerland, Norway and the UK also raised interest rates. The central bank in Turkey, on the other hand, cut interest rates, despite an inflation rate of more than 80 percent.
In addition, the number of first-time jobless claims in the US increased by 5,000 to 213,000. Leading indicators deteriorated as expected and consumer confidence plunged to a new low in September.
The price of oil closed 0.7 percent higher at $83.49 for a November future WTI oil. Government agency EIA reported a higher stock of natural gas. The price of oil rose on concerns about the escalation of the war in Ukraine by Russia, which is recruiting hundreds of thousands of civilian reservists to win the war. This could further shrink the energy flow between Russia and Europe, analysts fear.
The euro/dollar continued its decline, trading at 0.9834.
Meta Platforms wants to reduce costs by at least 10 percent in the coming months. This reported The Wall Street Journal. A reorganization is currently underway at Facebook’s parent company, old and current executives of the company told the business newspaper, and will result in job cuts. The stock closed slightly higher.
Crypto exchange FTX wants to raise a billion dollars from investors in a new financing round. The new financing round would value FTX at $32 billion, equal to the valuation at an earlier financing round in January this year.
FedEx’s figures will be on the roll tonight after the close of trading. But after a recent warning and price drop, they probably won’t cause much movement anymore. FedEx withdrew its outlook for this year. The delivery person is experiencing headwinds, especially in Asia and Europe. FedEx wants to cut costs, including by introducing a staff freeze and closing locations. The stock fell 1.5 percent. The price was virtually unchanged after the market, after the share closed 0.8 percent higher.
Source: ABM Financial News
From Beursplein 5, the editors of ABM Financial News closely follow developments on the stock exchanges, and the Amsterdam stock exchange in particular. The information in this column is not intended as professional investment advice or as a recommendation to make certain investments.