![]() Higher yields amp up the pressure on the economy not only by making loans more expensive and slowing growth. It crossed above 4.50% earlier in the morning. The two-year yield, which moves more on expectations for Fed action, rose to 4.43% from 4.29%. The yield on the 10-year Treasury, which helps set rates for mortgages and many other loans, rose to 3.93% from 3.90% late Wednesday. Treasury yields pulled back a bit from their initial, early-morning leaps, lessening a bit of the pressure on stocks. “There’s definitely that thought process coming in.” “If you’re at least starting to see headline CPI cool, there’s hope that core CPI will follow,” Hooper said. Even though what’s called “core” inflation accelerated last month, overall inflation including food and energy prices slowed by a touch. But higher rates take a notoriously long time to take full effect, and the Fed risks causing a recession if it ends up going too far.Īs the day progressed, and investors had more time to dig into the inflation report’s details, though, analysts said they perhaps saw some glimmers of hope. Higher rates make buying a house, car or anything else purchased on credit more expensive, and the hope is that will slow the economy and job market enough to undercut inflation. “I literally can’t even wrap my head around what the logic would be to buy (stocks) on any change in Fed policy.” “Anybody who had a hope of a pivot or a pause or a slowing in Fed policy tightening for the next meeting, that’s been dashed today,” said Liz Young, chief investment strategist at SoFi. ![]() The Dow Jones Industrial Average fell as many as 549 points shortly after the report’s release, and the Nasdaq was down as much as 3.2%.īut the market’s reversal had the Dow up 840 points, or 2.9%, at 30,051, as of 2:45 p.m. That forced investors to brace for continued, big hikes to interest rates by the Federal Reserve to get inflation under control, and the potential recession those moves could create. One component that’s closely followed by policy makers and investors accelerated to its hottest level in 40 years. government released its report showing inflation is spreading more widely across the economy. Other markets around the world also veered sharply from losses to gains.īesides stocks, prices also initially tumbled for bonds and cryptocurrencies immediately after the U.S. The S&P 500 was 2.5% higher in afternoon trading, a neck-snapping turn after being down as much as 2.4% in the morning and touching its lowest level in nearly two years. ![]()
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