Interest rates on the rise: Wall Street continues to readjust

Increase in interest rates
Wall Street keeps resetting

The situation on US stock markets has not changed. Market participants expect interest rates to rise. However, concerns about a possible recession are growing. This in turn affects the price of oil.

Led by technology stocks, US stock markets continued to fall. Market interest rates, which continued to rise, had a negative effect, hitting technology and growth stocks, which are seen as particularly sensitive to interest rates, in particular. Higher interest rates undermine their often high valuations. The highly anticipated US central bank meeting minutes in mid-March sparked some volatility, but overall did little to change previously seen trends in stocks, the dollar and interest rates.

S&P 500
S&P 500 4,494.44

The record contained little that was surprising. As well as signaling that interest rate hikes of 50 basis points instead of 25 might soon follow, it showed in particular that a final decision on reducing the central bank’s bloated balance sheet had not yet been taken and that this could not happen until May at the earliest. Fed Chairman Powell had previously said the Fed could start doing so as early as May and that the balance sheet reduction could be “equivalent to a further rate hike.”

the Dow Jones Index it lost 0.4 percent to 34,497 points, closing more than 200 points above the daily low. It was supported by gains in more defensive and relatively heavy stocks such as United Health, Johnson & Johnson, Walmart and Amgen. the trapped S&P 500 on the other hand, fell 1.0 percent, heavy tech Nasdaq Indices up to 2.2 percent.

Is the Bond Market Sending New Recession Signals?

Bond yields continued to rise, hitting three-year highs. The day before, two central bank officials who are seen as more dovish had made clear hard-line statements. On the day of the report, Philadelphia Fed President Patrick Harker said he believes a series of rate hikes is needed. The ten-year period was up 6 basis points at 2.61 percent, while the two-year period was down 3 basis points at 2.49 percent. As a result, the yield curve moved further away in this area from the recent inversion that is seen as a harbinger of a recession.

“It’s pretty clear to everyone that the Fed is about to embark on a rapid tightening cycle,” Lombard Odier economist Samy Chaar said before the minutes. “While they may be able to pull off a soft landing, it would be a miracle,” he continued, noting that central bankers must control inflation without plunging the economy into recession.

Also, the escalation in the Ukraine war with the obviously Russian atrocities depressed the mood, especially as more sanctions were already being introduced against Russia for this reason. Among other things, the US wants to ban “any new investment” in Russia and the EU wants to stop coal imports.

Oil prices fall to three-week lows

Real estate stocks, among others, suffered from rising interest rates in the stock market. grouppulte lost 2.7, lennar 4.3 or dr horton 4.0 percent. rivian automotive lost 5 percent. The electric car maker has hit its production and delivery targets, but the trade says market expectations for 2022 deliveries are, in some cases, significantly higher than Rivian’s forecast.

jet blue airlines it lost another 8.7 percent. Raymond James downgraded the stock. The airline has submitted a bid for low-cost airline Spirit Airlines, challenging its competitor Frontier Airlines. had the day before Spirit increased by more than 20 percent with these rumors. Now they lost 2.4 percent. Brands Tillray it gained 2.9 percent. The pharmaceutical company, which specializes in cannabis, returned to profit last quarter, beating consensus expectations. Advent Technologies reacted to news of a technology, sales and development partnership with Hyundai with a stock price explosion of more than 75 percent.

Oil prices fell significantly, most recently by nearly 5 percent to three-week lows. After a surprise rise in US oil stocks by a US industry association, official US oil stocks also rose last week. Additionally, daily US oil production has risen to its highest level since the outbreak of the pandemic. Oil prices were also hit as the International Energy Agency tweeted that developed countries would release 120 million barrels of emergency reserves, including the 60 million barrels announced by the US. Adding to this was widespread fear of stagflation as a stress factor.

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