Dow futures fell more than 300 points as markets watched Fed Chairman Jerome Powell’s speech to Congress on Wednesday.
At 6:44 p.m. Thai time, the Dow Jones Industrial Average dropped 315 points, or 1.03%, to 30,210 points.
The Dow Jones Industrial Average jumped more than 600 points yesterday, led by energy stocks. While investors speculate on stocks that fell heavily last week.
Powell will deliver a semi-annual statement on US monetary policy and economic conditions to Congress today and tomorrow. After the Fed raised its biggest interest rate in 28 years last week. Powell will address the Senate Banking Committee today at 9:30 a.m. U.S. time. Or tonight at 8:30 p.m. Thai time Before addressing the House of Representatives Financial Services Commission tomorrow
Investors were eyeing Powell’s statement for signs of interest rates and the US economic outlook. Amid concerns that the US economy may enter a recession as the Fed has accelerated to raise interest rates to curb inflation.
At its June 15 monetary policy meeting, the Fed lowered its forecast for US economic growth this year to 1.7 percent from 2.8 percent in March. Grow 1.7% in 2023
The U.S. Commerce Department released its second quarterly gross domestic product (GDP) estimate, showing that the U.S. economy contracted 1.5% from the previously reported 1.4% contraction in the first forecast. While analysts forecast the US economy contracted 1.3%.
The U.S. economy contracted in the first quarter of 2020, the first contraction since a recession in early 2020 was hit by the coronavirus pandemic.
If the US economy continues to contract in 2Q22, it will put the US economy into recession. due to the contraction of 2 consecutive quarters
The Fed previously submitted its semi-annual monetary policy report to Congress last week. Before Mr Powell made his statement today The Fed signaled that it would not let anything hinder its efforts to combat inflation.
“The Monetary Policy Committee (FOMC) is committed to ‘Unconditional’ in price stabilization This is necessary to maintain a strong labor market,” the Fed said in its report.
The use of the word “unconditional” in the report This indicates that the Fed is ready to take on the risks that may arise. so that the economy can avoid a worse situation from uncontrollable inflation that will damage the economy in the long run.
The FOMC raised the short-term interest rate by 0.75% to 1.50-1.75% at last week’s meeting. This was the biggest interest rate hike in 28 years, or since 1994.
In addition to its policy interest rate forecast (Dot Plot), Fed officials forecast interest rates to hit 3.4% by the end of the year. This indicates that the Fed will raise interest rates another 1.75% this year and it expects interest rates to rise to 3.8 percent by the end of 2023 and slow to 3.4 percent in 2024 while long-term interest rates remain. at 2.5%
With the Fed signaling a rate hike of 1.75% later this year, analysts are expecting a 0.75% rate hike in July and 0.50% in September, before only increasing it. 0.25% in November and December