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US Stocks Wobble Amid Powell’s Talk of Further Rate Hikes

The spotlight was on the Federal Reserve yesterday as US stocks found themselves on shaky ground. Investors were left grappling with Fed Chair Jerome Powell’s forecast that additional interest rate hikes may be in the pipeline.

Addressing a conference in Portugal, Powell emphasized that the Fed remains unwavering in its pursuit of curbing inflation. While the decision was made to abstain from increasing interest rates in June, this by no means indicates a halt in tightening monetary policy. Quite the contrary, Powell suggested that we may well be looking at two consecutive rate hikes in the near future.

Drawing upon recent data, Powell pointed out that growth has surpassed expectations, the labor market is tighter than anticipated, and inflation rates are climbing higher than predicted. “This indicates that while our policy may be restrictive, it may not be restrictive enough, or for long enough,” Powell asserted.

On a different note, President Joe Biden took to the stage in Chicago, singing praises for the economy and the tenacity of the job market. Bucking the pessimistic chatter, he suggested that the looming recession, feared by many economists, could be successfully dodged.

The market close on Wednesday painted a varied picture:

  • The S&P 500 just slightly dipped, closing at 4,376.86, down by a mere 0.04%.
  • The Dow Jones Industrial Average took a minor hit, falling 0.22% to 33,852.66 (a decrease of 74.08 points).
  • Meanwhile, the Nasdaq Composite saw a modest rise, gaining 0.27% to close at 13,591.75.

Other key events of the day include:

  • Bank of America’s CEO predicted that the Fed’s 2% inflation target won’t be met until 2025 and suggested an impending recession as consumer spending slows.
  • Apple stock continues its victorious climb, nearing the impressive $3 trillion valuation.
  • Wedbush’s Dan Ives heralded artificial intelligence as the onset of the “fourth industrial revolution,” anticipating a $1 trillion investment.
  • Surprisingly, two of the top-performing stocks in the S&P 500 this year are Royal Caribbean and Carnival Corp., both from the cruise line industry.
  • Semiconductor stocks took a hit following reports that the Biden administration may tighten restrictions on China’s access to AI chips, leading Nvidia shares to drop by 2%.
  • Joby Aviation enjoyed a whopping 44% surge after the flying-taxi company received a permit for flight tests.

On the commodities, bonds, and crypto front:

  • West Texas Intermediate crude oil and Brent crude saw significant gains, rising 2.44% to $69.35 per barrel and 2.10% to $73.78 respectively.
  • Gold slightly dipped, falling 0.22% to $1,919.60 per ounce.
  • The yield on the 10-year Treasury fell 5 basis points to 3.72%.
  • Bitcoin and ether both lost ground, down 2.04% to $30,073 and 3.05% to $1,832 respectively.

This cocktail of events leaves investors and entrepreneurs with plenty to consider as they strategize for the coming months. Keep your eyes peeled for the ongoing developments and market shifts!

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