The U.S. stock markets have decreased slightly in anticipation of Federal Reserve Chair Jerome Powell’s testimony to Congress. He is anticipated to answer questions about the central bank’s policies to combat inflation through interest rates.
The U.S. markets show little response on Wednesday morning in anticipation of Federal Reserve Chair Jerome Powell’s testimony before Congress. It is anticipated that Powell will answer questions about the central bank’s policies on interest rates to control inflation.
Before the start of trading on Wednesday, the futures for both the Dow Jones Industrial Average and S&P 500 decreased by approximately 0.1%. There was no change in oil prices.
The financial markets are worried that the Federal Reserve may resume increasing interest rates in the coming month and may need to keep them elevated for a prolonged period. This could cause significant strain on the economy and even lead to a recession.
Powell is scheduled to give testimony before two different committees, one in the House on Wednesday and the other in the Senate on Thursday. In the preceding week, the Federal Reserve decided not to change its primary lending rate, marking the first time in over a year that it did not indicate an increase. However, it cautioned that it may increase rates twice more before the end of the year.
Stephen Innes, who works at SPI Asset Management, commented that investors are becoming hesitant in anticipation of another round of speeches from the Federal Reserve, as there is only a limited amount of economic data being released.
He stated that due to the willingness of central banks to suffer from inflation at present, investors may require evidence of favorable inflation data convergence to reduce the vast difference between the Federal Reserve and the market’s estimated future inflation. Only then, they would be able to make further progress in U.S. stock markets.
There has been speculation that inflation is decreasing enough for the Federal Reserve to halt their interest rate hikes, which has resulted in a positive market trend. Additionally, a surge in interest towards artificial intelligence has led to a significant increase in stock values for certain tech companies.
Before Wednesday’s trading began, FedEx dropped by over 2%. This was despite surpassing its fourth-quarter profit targets. The reason for the slip in stock value was due to the company’s guidance for fiscal year 2024 being lower than what was anticipated by investors on Wall Street. As a result, UPS also experienced a decline in its stock value, dropping by approximately 1%.
In other locations, the Bank of England is scheduled to convene on Thursday to discuss policies regarding interest rates. Various central banks across the globe are taking different approaches to address concerns about inflation while dealing with the challenges posed by a struggling global economy.
Around noon in Europe, the DAX of Germany, Paris’ CAC 40, and Britain’s FTSE 100 all experienced a decrease of approximately 0.2%.
On Wednesday in Asia, the Nikkei 225 in Tokyo rose by 0.3% to reach 33,575.14 points. Conversely, the Hang Seng in Hong Kong declined by 2% to 19,218.35 points. Similarly, the Shanghai Composite also fell by 1.3% to rest at 3,197.90 points, while the Kospi in Seoul dropped by 0.9% to 2,582.63 points.
The S&P/ASX 200 index in Australia experienced a drop of 0.6% and closed at a value of 7,314.90. Meanwhile, Bangkok’s SET index faced a loss of 1.1%. In contrast, India’s Sensex index increased by 0.3%.
On Wednesday, oil prices dropped slightly from the previous day’s closing price. The current price for U.S. benchmark crude oil was $71.21 per barrel on the New York Mercantile Exchange, down 74 cents from Tuesday’s closing price of $71.19 per barrel.
The cost of one barrel of Brent crude, which is the global benchmark, amounted to $75.88.
The value of the US dollar increased from 141.43 to 141.76 Japanese yen, while the euro had a small rise in value from $1.0922 to $1.0924.
The U.S. stock market experienced a decline on Tuesday after showing signs of growth due to optimism about the economy’s ability to avoid a recession. The S&P 500 decreased by 0.5%, the Dow dropped by 0.7%, and the Nasdaq composite fell by 0.2%.
