The Dow sank more than 600 points on Wednesday after Federal Reserve Chairman Jerome Powell signaled an earlier-than-expected end to his quantitative easing (QE) bond-buying program.
At 11:48 pm Thai time, the Dow Jones Industrial Average stood at 34,533.47 points, minus 602.47 points or 1.71%.
Group stocks that benefit from the opening of the economy, such as airlines and cruise business They fell in today’s trading.
Mr Powell said The Fed may cut its QE limit by more than $15 billion a month, with the Fed to discuss its monetary policy meeting Dec. 14-15.
“Right now the economy is very strong. and inflationary pressures have increased So I think the time is right for the Fed to consider ending its bond-buying program several months earlier. We will discuss it at our next meeting,” Powell told the Senate Banking Committee today.
The Fed’s monetary policy committee voted to keep the short-term interest rate at 0.00-0.25 percent at its Nov. 3 meeting, and the Fed will cut its QE line by $15 billion a month starting in November. The Fed will cut its purchases of US government bonds by $10 billion a month and reduce its purchases of mortgage-backed bonds (MBS) by $5 billion a month.
Such a reduction in the QE limit will allow the Fed to end QE altogether by the middle of 2022.
Previously, the Fed had QE of $120 billion a month, with the Fed buying $80 billion in US Treasury bonds and $40 billion in MBS bonds.
Powell also warned that the spread of COVID-19 Omicron strains pose a risk to economic recovery. It will affect employment and economic activities. While the US will face high inflation for a longer time than expected.
“It is difficult to predict how long the inflation and supply impacts will be. But what is evident now is that inflation will remain in an uptrend until next year. And higher wages will also drive higher inflation.”
“Concerns about the increasing number of coronavirus cases and the epidemic of Omicron strains will make people do not want to return to work This situation will cause the labor market to slow down. and increase the disruption in the supply chain,” the statement said.
Mr Powell also said The imbalance between supply and demand caused by the COVID-19 epidemic This is the result of significant price spikes on some items. The personal consumption expenditure (PCE) price index rose 5% in October year-on-year.
The market has also been under pressure amid uncertainty over the vaccine’s effectiveness against COVID-19. Omicron species
Stefan Banzel, chief executive of Moderna, Inc., said current vaccines would be less effective at protecting against COVID-19. Omicron species with a warning that Pharmaceutical companies can take months to produce a new vaccine that will adequately protect against Omicron strains.
Investors will keep an eye on US non-farm payrolls on Friday. by analysts that The US Department of Labor will report the number of non-farm payrolls up 581,000 in November.
Earlier, the US Department of Labor said Non-farm payrolls rose 531,000 in October. That was higher than analysts’ estimates of 450,000 jobs from 312,000 in September. The unemployment rate fell to 4.6 percent, below analysts’ forecast of 4.7 percent from 4.8 percent in September.