US stocks continued to fall for the fourth consecutive day, with traders trying to assess the impact of the Federal Reserve policy last week. Fed officials have promised to continue raising interest rates till they are confident that inflation is coming down.
The S&P 500 index closed the day at its lowest in the last month. It dragged down tech stocks such as Microsoft Corp., Apple Inc., and Amazon.com Inc. NASDAQ. the tech-heavy index declined by 1.4% after Walt Disney Co. stock closed at its lowest Monday since march 2020 after a disappointing weekend box office sale of its biggest move release Avatar: The Way of Water.
Hawkish Stand
Traders speculated on the bank of Japan’s potential hawkish stance leading to a decline in treasury bonds led by long-term maturity securities. The 10-year yield of benchmark bonds rose the maximum in October. The dollar also wavered as investors speculated the rating outlook of the Federal Reserve after the exonymic data was released this week.
The recent remarks by the fed officials and other central banks on the hawkish moves have kept investors on edge globally. Risk assets have been impacted after the US policymakers signaled a rate above the market’s estimates.
Sentiments remained dull after William Dudley, an opinion Columnist at Bloomberg and a former New York Fed President, told on Bloomberg TV that optimistic markets would lead to the Federal Reserve tightening the monetary policy even more.
The Bundesbank President and governing council member of the European Central bank, Joachim Nagel, said that it would take some time for the inflation to come down to the Federal Reserve target of 2%. This comment also dampened the market mood.
However, some investors are looking ahead to the fears of economic recession caused by high-interest rates and are instead betting that inflation may be peaking, allowing the Fed to give some leeway in tightening policy.
Matt Brill, senior Portfolio Manager at Invesco, told Bloomberg Television that e says that 90% to 95% of the hike is over and the worst is behind us.
Housing Woes
The high construction costs and mortgage rates led to Homebuilder sentiments in the US sinking to their lowest in the last decade in December. Some major companies like Nike Inc. and FedEx Corp, which posted poor results in the last quarter, will report their earnings this month. Investors will closely monitor what these companies’ executives say about their industry outlook amidst challenging backgrounds.
Oil prices climbed while other global equity investors were relieved after China’s top leaders declared that they would boost the economy next year by supporting and reviving the private sector.
