Wobbler on Wall Street – E24

Wall Street started the day moderately higher, but has since fluctuated between a gentle rally and a pullback in early trade.

This is what it looks like for the three major indices after nearly an hour of trading:

• The S&P 500 index fell slightly by 0.07 percent
• The Nasdaq fell 0.24 percent
• The Dow Jones Industrial Average fell 0.08 percent

It was a heavy start to the week on Monday. The broad S&P 500 index fell 3.87 percent, while the Nasdaq tech index ended yesterday down by as much as 4.68 percent.

Global markets in general are having a quieter day on Tuesday, after the stock market turmoil that also affected Europe and Asia yesterday.

Yesterday’s sharp drop came on the heels of surprisingly strong inflation numbers from the US at the end of last week. Inflation fell to 8.6 percent in May, the highest level since the early 1980s.

Expect a threefold increase in the interest rate

The US Federal Reserve was clear that its most important task was to overcome high inflation, which affected both the United States and many other countries in the wake of the Corona pandemic and the invasion of Ukraine.

On Wednesday, the central bank will release a new interest rate decision.

Until recently, the expectations in the market and among experts were that there will be a new double rate hike, that is, the key policy rate will rise by 0.5 percentage points as in May.

Market participants are now pricing in more than a 90 percent chance of the Federal Reserve (Fed) raising interest rates by 0.75 percentage points.

– If the Fed raised the interest rate by 0.5 percentage point, one would think that the market would have reacted positively. The problem now is that the market may think the Fed is tightening too little, Danske Bank chief economist Frank Gollum told E24 earlier on Tuesday.

It still holds a button for a 0.5 percentage point increase, while other top economists now believe there will be a triple rate hike tomorrow.

Mass layoffs on Coinbase

Cryptocurrency exchange Coinbase announced Tuesday that it will lay off 18 percent of its permanent staff. The company has about 5,000 employees.

Coinbase CEO Brian Armstrong points to a possible recession. He believes that the company needs to increase efficiency, and that Coinbase has grown very quickly during the crypto boom last year.

“It looks like we are entering a recession after an economic boom that has lasted more than 10 years,” Armstrong says. “The recession could lead to a new crypto winter, and it could go on for a long time.”

Coinbase shares were down about five percent around 3:50 p.m., after dropping more than 11 percent on Monday during the cryptocurrency crash.

The cryptocurrency market has fallen sharply in recent months and weeks. The latest drop came this week, when bitcoin reached an 18-month low. On Tuesday afternoon, Bitcoin price crossed just over $22,000.

The crypto-market slump occurred at the same time that stock markets around the world have been marked by slump and turmoil this year, marked by concerns about rising inflation and higher interest rates ahead.