The Dow Jones closed on Thursday (Nov. 3), down 146 points amid fears of a recession. After the Federal Reserve (Fed) signaled to raise interest rates longer than the market expected.
The Dow Jones closed on Thursday (Nov. 3), down 146 points amid fears of a recession. After the Federal Reserve (Fed) signaled to raise interest rates longer than the market expected.
Dow Jones Industrial Average The S&P 500 fell 1.06% to 3,719.89 and the Nasdaq fell 1.73% at 10,342.94.
The market was also under pressure from the strong dollar. and the rebound in US government bond yields
The strength of the dollar has raised investor fears that it will affect the bottom line of listed companies with foreign earnings. The increase in yield on the 10-year US Treasury Bond, which is the US government bond used as a reference in the price of bonds around the world. This includes the US mortgage interest rate. makes consumers have less money to spend while the cost of paying off mortgage loans increases AND companies will face higher costs of paying off debts. causing these companies to reduce their investment and reduce dividend payments to investors
The Fed held its monetary policy meeting yesterday. with a decision to raise the interest rate by 0.75% as expected Which signaled that the Fed will raise interest rates by only 0.50% in December.
However, Fed Chairman Jerome Powell expressed his determination to continue raising interest rates to curb inflation.
Powell’s comments prompted investors to expect the Fed’s rate hike cycle to be longer than expected. Markets raised expectations for the Fed’s interest rate cap to 5% or higher next year. from the previous forecast of 4.50-4.75%
The Labor Department said initial claims for unemployment benefits fell by 1,000 to 217,000 last week. Contrary to analysts’ forecasts for an increase of 220,000.
However, the number of claims for unemployment benefits is above 215,000, the weekly average for the pre-COVID-19 pandemic in the United States.
Meanwhile, the US Department of Labor reported that the number of Americans who continued to apply for unemployment benefits rose by 50,000 to 1.49 million.
Investors are keeping an eye on tomorrow’s non-farm payroll numbers. Although analysts predicted that the number of jobs added only 205,000 in October. after adding 263,000 jobs in September
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