U.S. stock indices landed amid hawkish comments by Leil Brainard, a member of the Board of Governors of the U.S. Federal Reserve.
Nasdaq -2.26%
The Dow Jones index declined by 0.8% at the end of the trading session. The shares of Boeing (BA) -4.46%, Salesforce (CRM) -3.98% and Intel (INTC) -2.17%, which, by the way, finally decided to suspend its business in Russia, were among the leaders of the decrease of the main industrial benchmark.
Leil Brainard “landed” the Nasdaq. Deutsche Bank started talking about recession. Photo: Business Insider
The S&P 500 and Nasdaq broad market index were much more creative than their big brother, losing 1.26% and 2.26% respectively. The tech sector took the brunt of the selling, which experienced an incomprehensible surge Monday on news in TWTR stock.
Nvidia (NVDA) -5.22%, Advanced Micro Devices (AMD) -3.36%, Apple (AAPL) -1.89%, Alphabet (GOOG) -1.8%, Microsoft (MSFT) -1.3%. Some of the sales went to the banking sector. JPMorgan Chase (JPM) -1.89%, Bank of America (BAC) -1.39%.
Leil Brainard begins to fight inflation
“Currently,
inflation is too high and subject to upside risks. The committee is prepared to take more decisive action if inflation and inflation expectations indicators show that such action is warranted,” Lail Breinard reassured all doubters at the Minneapolis meeting.
According to Jerome Powell’s assistant, U.S. inflation has reached all-time highs, and fighting it is a top priority. To do so as early as next month requires not only a raise, but a $9 trillion withdrawal from the Fed’s balance sheet.
“The Fed raised rates last month for the first time in three years. The consensus forecast shows that they will reach the 1.75% -2% range within nine months. That would require them to increase by a quarter point at all six remaining meetings this year,” Reuters reports.
Deutsche Bank talks of recession
As inflation struggles, talk of a recession is beginning to “surface
.”
The first major financial institution to openly talk about it was the German Deutsche Bank. The economists of the banking giant do not see the FRS possibility of the so-called soft landing any more, and the aggressive toughening of the monetary policy will push the US economy to nothing else but recession.
In the meantime, investors continue to keep a close eye on the Treasury bond yield curve, which flipped last week – a clear historical harbinger of recession. Each of the last eight economic slowdowns since 1969 has been preceded by a yield curve inversion.
The U.S. dollar is strengthening
Against
the backdrop of a “birther” debate on the sidelines of the Federal Reserve, it was not long before the U.S. currency strengthened. The U.S. dollar index against major currencies rose to 99.64, the highest value in almost two years.
