Wall Street fell on concerns about interest rates

This is how trading ended on the leading US stock market indices on Thursday:

• The Standard & Poor’s 500 collective index, which consists of 500 of the largest companies listed in the United States, fell 0.32 percent.
• The Nasdaq Composite Index, which was dominated by technology stocks, fell 0.35 percent
• The Dow Jones Industrial Average, which consists of 30 supposedly important stocks, fell 0.09 percent.

Fed member James Bullard said Thursday that the key interest rate, now in the 3.75-4.0 percent range, remains in an area that would be considered sufficiently restrictive. Market interest rates will rise cautiously on Thursday.

Bullard is known as one of the big central bank “hawks”, which means he likes to advocate for more restrictive monetary policy. Already in March, he called for raising the main interest rate to three percent at the end of 2022, while the majority of central bank members expected 1.5-2.0 percent.

In April, Bullard said in an interview with the Financial Times that it was a “fantasy” to think the Fed could bring down inflation without raising interest rates to a constraining level. At that time, the annual increase in inflation was 8.5 percent, while the main interest rate was between 0.25 and 0.5 percent.

In October, the annual increase in inflation was 7.7 percent. The figure was lower than expected, but inflation is still the highest in decades and well above the long-term target of 2%.

The market now estimates an 80 per cent chance of a 0.5 percentage point rate hike in December. At the same time, 0.75 percentage points are given as a probability of 20 percent.

Federal Reserve Member Esther George expressed concern about the tight labor market in the Wall Street Journal on Wednesday. As of now, there are two job vacancies for every unemployed person in the United States, which is the highest in several decades.

George said – I see the labor market so tight that I don’t see how you can continue to bring down inflation without a strong brake, maybe even a deflation in the economy. (Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We’d like you to share our statuses using links that lead directly to our pages. Reproduction or other use of all or part of the Content may be made only with written permission or as permitted by law. For additional terms look here.