Global Markets Stall and Wall Street Rally Halts After Rate Hike Worries Resurface

Barry Adams
23 Jun, 2023
New York City

Stocks extended weekly decline after tech rebound in Thursday's session fizzled. 

The S&P 500 index and the Nasdaq Composite index extended weekly losses on the rate hikes worries following the comments from Federal Reserve Chairman Jerome Powell. 

Powell stressed inflation is still too high and the Fed is not done raising rates in his comments to the Senate committee on finance and banking. 

Inflation has halved since reaching a peak of 9% last August but much of the easing is driven by the sharp fall in energy prices and normalizing of supply chains. 

The Federal Reserve has limited impact on goods prices and supply chain driven inflation, but the central bank has a greater influence on service sector inflation. 

Service sector inflation has shown no sign of easing and Powell suggested that the full impact of multiple rate hikes has not been fully felt. 

Market indexes also traded lower on the worries that the Fed is likely to raise rates at least one or two times this year and keep rates higher longer to cool down inflation, 

But in order to cool inflation to 2%, the Fed may be forced to dip the economy into a recession. 

European markets are set to close the week down with a loss of 2% and tech heavy Hang Seng index in Hong Kong plunged more than 3% this week. 

The Nikkei index in Tokyo dropped 2.3% after Consumer price inflation in May declined to 3.2% from a three-month high of 3.5% in April. 

 

U.S. Indexes & Yields 

The S&P 500 index increased 0.8% to 4,347.88 and the Nasdaq Composite declined 1.1% to 13,479.05.

The yield on 2-year Treasury notes increased to 4.71%, 10-year Treasury notes inched lower to 3.70% and 30-year Treasury bonds edged down to 3.80%. 

Crude oil decreased $1.37 to $68.13 a barrel and natural gas prices decreased 5 cents to $2.54 a thermal unit. 

 

U.S. Stock Movers

CarMax, Inc increased 9% to $85.37 after the used car retailer reported better-than-expected quarterly results. 

Starbucks Corporation declined 2.4% to $98.42 after a union representing workers said about 150 stores are ready to strike beginning Friday after the company disallowed Pride month decor in its stores.

Accenture Plc declined 1.9% to 301.38 a day after the information technology services provider reported better-than-expected sales and earnings but trimmed its annual revenue growth outlook slightly.