Despite the current outlook, there may be significant resilience in the U.S. stock market in the medium to long term.
Inflation fears are far from over in the US stock market following the release of the Federal Reserve’s favorable inflation indicator, called the Personal Consumption Expenditure Index (PCE).As report Core PCE increased 0.4% month-over-month in January, up 4.7% year-to-date, according to CNBC.
The data has angered markets as experts fear the data will give the Federal Reserve the leverage to advance its hawkish monetary push. The Federal Reserve raised interest rates by 25 basis points earlier this month in light of lower inflation using the Consumer Price Index (CPI) gauge.
Following the latest release, the top U.S. stock market indices have begun to experience significant declines to amplify losses incurred in the year-to-date period. The Dow Jones Industrial Average (INDEXDJX: .DJI) is down 1.34% to 32,710.90. The broader S&P 500 Index (INDEXSP: .INX) also posted a significant drop, dropping 1.65% to 3,946.28.
The tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) was also put on the market, dropping 2.08% to 11,349.84. This broader crash reflects individual companies whose stocks have plummeted due to many other negative fundamentals.
For example, the shares of American multinational aircraft manufacturer Boeing (NYSE: BA) are down 4.16%, trading at $199.53 per share. Other big tech companies, including retail giants Amazon.com Inc (NASDAQ: AMZN) and Microsoft Corporation (NASDAQ: MSFT) each also dropped more than 2%.
Wall Street firms were optimistic about new positive growth on favorable interest rates this year. With banks recording impressive earnings and likely to return to rate hikes, there could be a great deal of uncertainty about the earnings outlook shared so far.
U.S. Stock Markets and Resilience Play
Despite the current outlook, there may be significant resilience in the U.S. stock market in the medium to long term.
Art Hogan, Chief Market Strategist at B. Riley, said: “This may test recent lows, but I don’t think it will push us to new lows. I think we just confirmed that it’s high, and that’s the consensus.”
Hogan said the current PCE numbers don’t necessarily justify a quick return to higher rate hikes unless future PCI numbers show inflation isn’t slowing as expected. I’m confident.
“I don’t think it’s enough to say the 2023 rally is over. I don’t think so. I think a lot of this is already baked into our expectations of monetary policy.” he added.
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Benjamin Godfrey is a blockchain enthusiast and journalist who enjoys writing about real-world applications and innovations in blockchain technology, driving general acceptance and global integration of emerging technologies. His desire to educate people about cryptocurrencies has inspired his contributions to famous blockchain-based media and sites. Benjamin Godfrey loves sports and farming.
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