Wall Street closes its worst week of the year due to high inflation

Wall Street closed the worst week since the beginning of the year, with falls of around 3% in its main indicators, after receiving data on inflation that does not subside and that will potentially lead the US Federal Reserve to be more aggressive in raising interest rates.

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The week, which has been shorter due to the Presidents Day holiday on Monday and therefore more volatile, it leaves an accumulated drop of 3% in the Dow Jones Industrials; a retracement of 2.7% in the selective S&P 500; and a 3.3% loss on the Nasdaq index.

The investors they are betting on the sales of securities and public debt as the latest economic data reveals more persistent than expected inflation and a resilient economy, suggesting that the central bank has room to tighten monetary policy.

The last of these data was published this Friday: the PCE price index, which measures personal consumption spending, increased in January by 4.7% year-on-year and by 0.6% compared to the previous month, above what was expected. Meanwhile, new home sales increased in January and, to the surprise of many, consumer confidence was revised up for February, marking its highest in 13 months.

The minutes of the last Fed meeting – in which rates were raised by 25 basis points – published this week indicated that several members were in favor of a 50 point risea support that some analysts predict will continue to grow in the organization.

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This Friday, for example, the president of the Boston branch of the central bank, Susan Collins, anticipated more work to bring inflation to the 2% target not only through raising rates but also by keeping them high for an “extended” period of time.

Short-term Treasury yields, which reflect investor expectations for interest rates, spiked on Friday to levels not seen since 2007, with the 2-year title offering 4.82%, and the 10-year title, 3.97%.

All sectors have ended the week with a drop, according to the analysis firm Fidelity, and the most affected have been those of non-essential goods and communications, with falls close to 5%, and energy and technology (4.5% and 3.85%, respectively).

At the corporate level, with the season of quarterly results giving its last throes, the figures of an important company, Berkshire Hathaway, and perhaps some lesson from its owner, are expected this Saturday. investment guru Warren Buffett, who usually accompanies them with a letter.

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In the oil market, the Texas barrel It has barely become more expensive by 0.2% after a volatile week marked by this uncertainty regarding the Fed, which reinforces the value of the dollar against other currencies, and by the ramifications of the war in Ukraine, which has been going on for a year now.

EFE