The Dow Jones continues to fall. It recently tumbled more than 700 points after revealing that retail sales numbers plummeted more than expected. As a result, investors fear that the US Federal Reserve (Fed) move to raise interest rates will drag the US economy into a recession.
As of 22:05 Thai time, the Dow Jones Industrial Average was 33,258.43 points, down 707.92 points or 2.08%.
The market is also under pressure from the strong dollar. This will affect the profits of listed companies that receive income from abroad.
The US Department of Commerce said that Retail sales fell 0.6% in November, the biggest drop in 11 months, while analysts had expected a 0.1% drop after rising 1 .3% in October.
Retail sales are affected by inflation. which has led to an increase in product prices while savings decrease Amid weak economic prospects
Basic Retail Sales of autos, gasoline, building materials and food, which exclude autos, fell 0.2% in November after gaining 0.5% in October.
The Federal Open Market Committee (FOMC) unanimously raised the short-term interest rate by 0.50% to a range of 4.25-4.50% at its meeting yesterday. which is the highest level in 15 years.
In their Interest Rate Expectations (Dot Plot), Fed officials expect to continue raising interest rates in 2023 and not cut them until 2024, when the Fed will hike interest rates to their highest level, 5 .1% next year, above market expectations. and will keep the interest rate at that level for a period of time to keep an eye on the impact of monetary policy tightening on the US economy
Sylvia Jablonski, CEO and chief investment officer of Defiance ETFs, said the Fed’s monetary policy tightening is hampering this year’s “Santa Rally.”
“The Fed is blocking the way for Santa’s sleigh,” Jablonski said.
Ms. Jablonski said Fed Chairman Jerome Powell’s statement sent a loud and clear signal. He has no intention of slowing down. Or deflect from the Fed’s interest rate hike.
“The Fed will hike interest rates higher and for longer. and monetary policy will be tighter than expected As the market will be under pressure for a longer time from Fed policy. Despite the temporary rebound in response to earlier CPI numbers, the Fed’s stance will expose the market to short-term volatility term,” Jablonski said.
The “Santa Rally” usually lasts for seven working days, with the last five working days of the current year and the first two days of the new year.
The Labor Department said initial jobless claims fell by 20,000 to a seasonally adjusted 211,000 last week. which is the lowest level since September. And below analyst expectations by 230,000.
The number of jobless claimants was less than 215,000, the pre-COVID-19 weekly average in the United States.
At the same time, the US Department of Labor reported that Number of Americans still filing for unemployment benefits increased to 1.671 million
