Stocks Rebound Lacking Direction On Wall Street

Barry Adams
17 Jun, 2022
New York City

Stocks lacked direction and investors struggled to digest the impact of rising rates and Fed's ability to tame inflation without dipping the economy into a recession. 

The mood on Wall Street reversed a day after the Fed raised rates at a faster pace than advertised before as investors began to digest the implications of higher rates faster. 

The 75 basis points rate increase also accompanied the Fed lowering economic growth rate estimate to 1.7% for the current year from the previous estimate of 2.8% in March and increasing the jobless rate to 3.7% from 3.5%. 

The 30-year fixed-rate mortgage rates jumped to 5.78% for the week ending June 16, an increase of more than half a percentage point and largest increase on a weekly basis since 1987, according to the survey conducted by Freddie Mac. 

Mortgage rates have jumped little more than two-and-a-half percentage points from the beginning of the year and jumped from 2.93% a year ago. 

Total industrial production increased 0.2% in May and output has increased in every month of the year so far, with an average monthly gain of nearly 0.8%, according to the latest data released by the Federal Reserve. 

Manufacturing output declined 0.1% after three months when growth averaged nearly 1%.

In May, the indexes for utilities and mining rose 1.0% and 1.3%, respectively. 

Capacity utilization increased in May to 79.0% from 78.9% in April, the Fed statement noted. 

The S&P 500 declined 0.6% to 3,644.98 and the Nasdaq Composite rose 0.1% to 10,657.90. 

For the week, the S&P 500 is down 3.3% and the Nasdaq Index 2.01%. 

Tech stocks led the mild rebound in early trading. 

Apple, Tesla, Amazon, Meta, Alphabet, and Microsoft rose between 1.0% and 1.5%. 

Home Depot, Intel, JPMorgan, and 3M dropped to their new 52-week lows today.  

 

European Markets Down 3% Weekly, Record High Inflation  

 

European markets advanced and crude oil prices stabilized as investors shook off worries of rising rates and elevated inflation. 

Market indexes advanced after crude oil prices stabilized above $115 a barrel and European natural gas prices declined 1.4% to $122.34 a unit. 

Stocks opened higher but lacked direction and continued to trade in a tight range and positive bias after the Chinese cabinet vowed to support economic recovery through several measures. 

Investors also took in strides the latest moves by the central banks in the UK. and Switzerland. 

The DAX index gained 1.1% to 13,104.29, the CAC-40 index advanced 0.5% to 5,917.74, and the FTSE 100 index rose 0.5% to 7,078.28.

For the week, the DAX index declined 2.98%, the CAC-40 fell 2.47%, and the FTSE 100 index eased 3.3%.  

Euro zone inflation rose to a record high of 8.1% in May on an annual basis, according to the final data released by the eurostat today. 

The Swiss National Bank raised its key lending rate by 50 basis points to -0.25% and revised higher its inflation outlook for the year on Wednesday. 

In 2022, the Swiss economy is estimated to grow at 2.5% and inflation at 2.8% before cooling down to 1.9% in 2023 and 1.6% in 2024. 

The SNB noted in a statement that the unemployment is likely to remain low and  "mortgage lending and residential property prices have risen further in recent quarters. 

The SNB will continue to monitor developments on the mortgage and real estate markets closely." 

On Thursday, the Bank of England lifted its key lending rate by 25 basis points to 1.25% and said inflation is likely to reach above 11% in the next few months. 

The central bank noted that not all inflation is driven by the war in Ukraine and supply chain disruptions but pricing strategies of goods and services providers are also playing a role. 

Banco Santander SA gained 2.7% to 2.71 euros after the Spanish bank appointed H