The eagerly awaited speech by US Federal Reserve Chairman Powell causes stock markets to buckle. The price of gold is coming under more pressure. Weak consumer spending in the US is only having a temporary impact on oil prices.
The US stock exchanges reacted to hawkish statements by US Federal Reserve Chairman Jerome Powell with sharp price losses. In his much-anticipated speech at the Jackson Hole Fed meeting, Powell made it clear that tackling high inflation is the Federal Reserve's top priority, even at the cost of a recession. The Fed chair warned that this would weaken the labor market and be painful for households and companies alike.
As a result, the Dow Jones index lost 3.0 percent. The S
The day's economic data contained ups and downs, but gave no impetus to the market, which was completely fixated on Powell's statements. The consumer sentiment index determined by the University of Michigan rose surprisingly significantly in August. US personal income and spending were weak in July, but more important was the month-on-month PCE price index decline, showing easing price pressures.
The dollar benefited only to a limited extent from the prospect of further increases in US interest rates, with the dollar index rising by 0.3 percent. The greenback was little changed against the euro in late trading. Because even within the European Central Bank (ECB), the determination to curb inflation in the euro zone is apparently growing. Reuters, citing unnamed sources, reported that some ECB Governing Council members planned to discuss a 75 basis point rate hike at the September meeting. An impending recession in the euro area should neither stop nor slow down the normalization of monetary policy. As a result, the euro temporarily rose again just above the dollar parity.
Prices on the bond market developed inconsistently. Some investors withdrew with the prospect of rising interest rates. However, some maturities gained momentum thanks to concerns about the economy. Weak consumer spending in the US had only a temporary impact on oil prices. The market is fluctuating between a possible weakness in demand due to the impending recession in many economic areas on the one hand and a possible supply shortage due to subsidy cuts by the OPEC cartel, traders reported. Gold prices came under more pressure with Powell's hawkish comments. In addition, ABN Amro, among others, has significantly lowered its price forecasts at the end of the year.
The biggest losers in the Dow were 3M with minus 9.5 percent. A bankruptcy judge in Indianapolis has declined to hear the case in the Indianapolis bankruptcy court over earplugs for the military that provided insufficient protection, leaving wearers with hearing loss. That solution had previously been granted to 3M subsidiary Aearo Technologies, which was then able to file for Chapter 11 bankruptcy protection. Around 230,000 lawsuits are pending against the company because of the earplugs.
Dell Technologies slumped 13.5 percent. The computer manufacturer presented sales and net profit below market expectations in the second quarter. Workday advanced 2.5 percent after the enterprise software maker reported higher sales and subscription revenue for the second quarter. According to the company, the momentum should continue in the third quarter.
Ulta Beauty stock fell 1.9 percent. The cosmetics chain reported second-quarter sales and adjusted earnings above analysts' expectations, but the stock couldn't escape the downward spiral.
CAP fell by 1.8 percent. The apparel retailer posted a loss in the second quarter on declining revenue. However, analysts had expected a higher minus. On an adjusted basis, a profit was unexpectedly booked.
Affirm Holdings collapsed 21.3 percent. The financial service provider reported a higher deficit in the fourth fiscal quarter. The outlook also fell short of market expectations. Marvell Technology fell 8.9 percent, the technology group disappointed with sales for data centers.
