Wall Street closed this Friday in the red and the Dow Jones Industrials, its main indicator, fell 3.03%, ending its second consecutive week in negativeafter the president of the Federal Reserve (Fed), Jerome Powell, said that the central bank must continue raising interest rates and keep them at a higher level until inflation is under control.
(Read: ‘Another reform may be needed in about two years’: Santamaría).
At the close of trading on the New York Stock Exchange, the Dow Jones subtracted 1,008.38 points, to 32,284.40 integers, while the selective S&P 500 fell 3.37% or 141.46 units, to 4,057.66 points . For its part, the composite index of the Nasdaq market, which brings together the main technology companiesfell 3.94% or 497.55 integers, to 12,141.71 units.
Regarding the week the Dow Jones fell 4.2%, while the S&P 500 and the Nasdaq lost approximately 4% and 4.4%, respectively. Investors had been waiting all week for Powell’s comments on how the central bank would achieve its goal of reducing inflation while minimizing the risks of a deep recession.
While the Fed’s moves to cut the rate of investment, spending and hiring “will reduce inflation, they will also bring some pain to households and businesses,” Powell said in his speech at the symposium in Jackson Hole, Wyoming.
“Those are the unfortunate costs of reducing inflation. But failure to restore price stability would mean much greater pain,” he added. “The biggest surprise here is that investors were preparing for Fed Chairman Powell to talk about his strong plans on inflation, but reacted negatively after he did exactly that,” he said. Michael Arone, chief investment strategist at State Street Global Advisors told The Wall Street Journal.
“It seems investors were naively expecting a turnaround from Powell, but instead he doubled down on the Fed’s credibility in fighting inflation.Powell did not speak directly about the outlook for the Fed’s monetary policy meeting in September, but said the next rate decision “will depend on the totality of incoming data and the evolution of the outlook.”
Fed officials raised interest rates by 0.75 percentage point at each of their last two meetings, most recently in July, to a range between 2.25% and 2.5%. At its late-September meeting, the Fed is expected to raise rates further, though whether it will do so by 0.5 percentage point or 0.75 point is unknown.
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After Powell’s speech, the 11 sectors of Wall Street were dyed red and the biggest losses were for non-essential goods (-3.88%) and essential goods (-2.48%). Among the 30 listed companies of the Dow Jones, red also dominated and the losses of 3M (-9.54%), Salesforce (-4.99%) and Intel (-4.39%) stood out. In other markets, Texas oil closed today at $93.06 a barrel, and at the close of Wall Street, gold fell to $1,749.30 an ounce, the yield on the ten-year US Treasury bond rose to 3.03 % and the dollar rose against the euro, with a change of 0.9966.
EFE
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