Wall Street closed its worst week in months on Friday. mainly due to the rise in inflation in USA and the fear of recession.
(See: Economic Effects of the US’s Largest Water Reservoir Drying Up).
In the weekly accumulated, the Dow Jones Industrials cut 4.58%; the selective S&P 500 fell by 5.05% and the index nasdaq it sank 5.60%.
Investors bet at the beginning of the week on purchases, but then they got carried away by nerves ahead of the publication, this Friday, of the US consumer price index.
The rate of inflation in the country rose in May to 8.6%, three tenths above that of April and the highest in 40 years, especially due to the strong energy price increase.
This new escalation makes the already foreseeable new rise of half a point in interest rates by the Federal Reserve (Fed), which meets next week.
(See: You will no longer have to present proof of covid to enter the US.).
“Most thought that inflation had peaked a couple of months ago, and the fact that it has risen means readjustment is needed, including the FedJohn Madziyire, a portfolio manager at Vanguard, told The Wall Street Journal.
The debt market has sufferedconsequently, strong movements, with the 2-year Treasury bond yield exceeding 3% for the first time since 2008.
On the other hand, analysts pointed to the deterioration of consumer confidence in the US, which for June would be at an unprecedented low, according to preliminary readings.
“Consumer financial situations have worsened by 20% and that does not bode well for consumer spending“, pointed out the analyst Edward Moya, from the firm Oanda.
(See: Inflation picks up in the United States and closes May at 8.6% annual).
Among the sectors most affected by the rise in rates and the potential recession have been the technological and the one of non-essential goods, that have lost about 5% of value.
The sell-off in shares has hit some tech bigs, such as Amazon, losing more than 10% cumulative; Goal (-8%) or microsoft (-6.3%).
Instead, the industry Energy it has been the only one in the green this week, with a rise of around 2%.
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In the oil market, the barrel of texas crude has remained almost unchanged due to the dollar strengthening against other currencies, but already exceeds the psychological barrier of 120 dollars.
EFE
