Inflation stops recording record levels for gold, Bitcoin and US stocks
The ending week witnessed record levels for many types of assets, led by gold, the cryptocurrency Bitcoin, and US stocks. However, the release of government data confirming the acceleration of inflation in the largest economy in the world caused a bad end to the week, a few days before the important Federal Reserve meeting.
The S&P 500 index on Tuesday hit a record closing high for the 17th time this year, as investors shrugged off a higher-than-expected 3.2% annual rise in the consumer price index and welcomed a slowdown in some categories such as food prices.
Stocks were not the only winner this week, as gold settled at a record level of $2,188.60 an ounce on Monday, after investors became more confident that the Federal Reserve will cut interest rates by June, and the cryptocurrency Bitcoin also reached a record level at the same time. Earlier this week, it was approaching $74,000 per unit.
But by the middle of the week, stock indices reduced their gains, due to renewed concerns about inflation, and both the yellow metal and the cryptocurrency fell from their record levels.
The Dow Jones Index lost 191 points, or about half a percentage point, in the last trading days of the week, and the S&P 500 Index, which most reflects the sectors of the American economy, declined by nearly two-thirds of a percentage point, while the Nasdaq Index, which is most affected by interest expectations, approached a loss. From 1%. The three major US stock indices ended the week in decline.
The latest Producer Price Index, released on Thursday, revealed that US wholesale inflation rose 1.6% in the 12 months to February, its fastest rate in months, due to higher energy prices. That sent the Dow Jones down more than 300 points at its lowest level on Thursday, before paring losses.
“This situation is not just a blip on the radar,” Ken Tjonasam, portfolio strategist at Global “We are witnessing a clear deviation from the direction we had hoped we would be headed, especially in light of the Federal Reserve’s clear intention to wait for inflation indicators to improve before moving to reduce interest rates.”
Disruption for airline stocks
Airlines stocks fell this week, driven by safety problems at aircraft giant Boeing, which spread to other players in the important industry in the US economy. A LATAM Airlines 787 Dreamliner, flying from Australia to New Zealand, suddenly lost altitude mid-flight, possibly due to a cockpit error, according to a report published by The Wall Street Journal.
In addition, Southwest Airlines said that Boeing notified it that it would deliver 46 Max 8 aircraft in 2024, 12 fewer aircraft than previously expected. The airline also said it is not providing full-year guidance at this time.
Switching aircraft manufacturers is not easy for airlines, as most pilots are certified by Airbus or Boeing, which constitute a duopoly.
“Boeing needs to become a better company, and then deliveries will get better,” Southwest CEO Robert Jordan said at a JPMorgan Chase industry conference on Tuesday.
The NYSE Arca Global Airline Index, which tracks the performance of major US and foreign airline stocks, ended the week with a decline of more than 2%. Boeing shares also fell by 8%, and Southwest shares fell by 17.3%, during the week.
But Liz Young, head of investment strategy at SoFi Financial, pointed out that the S&P 500 has not seen a single-day decline of 2% or more since last February, which she considered “the longest stretch of this achievement since February 2018.”
Young said, in a blog post she published before the end of the week, “This signal does not mean that the market is heading toward selling, or that it is heading toward more gains. It is simply a testament to how strong the market has been for more than a year, especially during a time when many were expecting Recession.”
What to expect over the next week
Investors will have more economic data and corporate events to follow next week, as NVIDIA, the star of the artificial intelligence industry beloved by investors, hosts its Worldwide AI Conference for Developers from March 18 to 21. Its CEO, Jensen Huang, is expected to deliver a speech during the conference.
Artificial intelligence startup Super Micro Computer is also scheduled to join the S&P 500 index before the market opens on Monday. The company’s shares have risen approximately 276% so far this year.
The Federal Reserve will begin its monetary policy meeting on Tuesday, and will conclude its work by announcing the interest rate decision, which is widely expected to be fixed for the fifth time in a row. So far, markets expect the world’s largest central bank to begin cutting rates in June or July, according to the CME FedWatch tool.
Investors will be closely watching the latest summary of economic expectations, which Federal Reserve Chairman Jerome Powell is expected to deliver following the announcement of the interest rate decision. Interest rate expectations are supposed to be disclosed from each member of the bank’s Federal Open Market Committee.
Wall Street will also have to deal with a slate of new data expected to be released on the housing market next week, including the National Association of Home Builders index, the Wells Fargo housing market index, home construction starts data from the Census Bureau, and the monthly existing home sales report from the National Association for the housing market.
2024-03-16 17:04:44
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