October 1, 2022

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Mixed on Wall Street before rate announcement - tech heavy Nasdaq down more than 2%

Mixed on Wall Street before rate announcement – tech heavy Nasdaq down more than 2%

For the third week in a row, the war in Ukraine was the main topic of talks, as well as in the financial markets.

In pre-trade, many indicate a weak start. Nasdaq futures are down slightly, while futures indexes related to the S&P 500 and Dow Jones are slightly on the positive side.

After mixed developments throughout the day, it looks like this at the close on Wall Street:

  • The Dow Jones index closed completely unchanged from Friday’s closing price. Before the opening, the heavy industry index had fallen five consecutive weeks for the first time in nearly three years, and is now 11 percent below its peak at the start of the year.
  • The S&P 500 fell 0.74 percent. The collective index is nearly 13 percent off the top, which was also reached at the start of the year, and has fallen four of the past five weeks.
  • Nasdaq fell 2.04 percent. The tech index is down more than 20 percent since its peak last fall, and has also fallen in four of the past five weeks. Tesla, Amazon and Apple are all between two and five percent.

On Wednesday, the schedule is set for the US Federal Reserve’s interest rate meeting, a meeting that the US market will follow with scrutiny.

Expect interest rates to rise

In recent months, there have been discussions about raising interest rates and reducing support purchases that have dominated the headlines. Governor Jerome Powell and the Federal Reserve have indicated for some time that there will be more rate increases in 2022, at the same time that support purchases will be reduced throughout the year.

At the same time, the war in Ukraine, turmoil in value chains, and high inflation were hot topics of discussion. The Fed said it will take action to curb high inflation through further rate hikes.

according to financial times The market is now pricing in nearly seven interest rate hikes in 2022, and the key policy rate is expected to rise from nearly zero after Wednesday’s meeting, the first rate hike since the start of the Corona pandemic.

Last week, it became clear that the European Central Bank (ECB) did not raise interest rates, but announced that it would reduce its purchases of support during the pandemic.

On Monday night Norwegian time, the interest rate on US government debt with a ten-year maturity rose above 2%, and is now at its highest level since July 2019.

“What does the Federal Reserve think?”

Shakib Syed, portfolio manager at DNB Asset Management, believes that the Ukraine war means that many of the macroeconomic numbers that would normally get some attention this week end up in the shadows.

In addition to the US Federal Reserve, there are also interest rate meetings in Japan and the UK this week.

– The most important thing for market development is the situation in Ukraine: everyone gathers at a high level, all diplomatic attempts and whether they lead to progress or not. Syed said Monday morning that among the overall numbers, inflation numbers in particular are still very significant during the day.

He has been excited about how much weight the Federal Reserve will place on the situation in Ukraine, and whether it will also maintain a “hawkish” tone in light of the war. The word “hawk” means someone who wants to let interest rates rise to curb high inflation.

– What does the Federal Reserve Bank of Ukraine think? The director said there are no inflation figures from the big economies this week, but developments in oil prices are one side of the same problem and will be significant in terms of household purchasing power.

After the sharp jump last week, when the price of a barrel of North Sea oil reached 130 dollars, its price on Monday afternoon was about 107 dollars. The price of US light oil also fell last week and is now around $105 a barrel. (Terms)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using a link that leads directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.