Home News US Stock Extend Decline As Investors Prepare for a Potential 75 Basis Point Rate Hike From the Fed

US Stock Extend Decline As Investors Prepare for a Potential 75 Basis Point Rate Hike From the Fed

US Stock Extend Decline As Investors Prepare for a Potential 75 Basis Point Rate Hike From the Fed

US stocks traded mostly lower on Tuesday, extending their two-day decline to about 5% as the S&P 500 solidified its new bear market regime.

The heightened volatility in the stock market comes as investors fret about an expected sizable increase in interest rates on Wednesday when the Federal Reserve concludes its meeting of the Federal Open Market Committee.

The Fed was previously expected to raise interest rates by 50 basis points, but following Friday’s hot CPI inflation report, the central bank is now expected to raise interest rates by 75 basis points. Though, there’s no telling if the interest rate hike will help cool inflation, which is mainly being driven by supply-side constraints, rather than demand.

Meanwhile, those higher interest rates could have a chilling effect on the economy and push mortgage rates to levels not seen in many years.

Goldman Sachs is now warning investors that the chances of a US recession are on the rise as the Fed is likely to hike interest rates by 75 basis points at its next two meetings. Traders now expect the Fed to hike rates to close to 4% in 2023.

But perhaps what’s worse than high inflation, and even a recession, is a prolonged period of stagflation, which the Fed is trying to prevent with its interest rate hikes. Over 80% of investors now expect stagflation to shock the stock market within the next year, according to Bank of America.

Amid the ongoing chaos in the cryptocurrency market, with bitcoin briefly falling below $22,000 on Tuesday, Tether’s stable coin barely lost its dollar peg again. Tether’s stable coin hit $0.9975 after the Celsius crypto network halted withdrawals over the weekend.

Coinbase stock fell on Tuesday after the company was downgraded by JPMorgan, citing the broad decline in the cryptocurrency market. Separately, Coinbase announced a round of deep job cuts, impacting about 18% of its workforce.

Bitcoin losses piled up for companies that added the cryptocurrency to their balance sheet. MicroStrategy, Tesla, and Block have a combined unrealized loss of more than $1 billion in bitcoin, based on Tuesday’s prices.

West Texas Intermediate crude oil fell as much as 2.87% to $117.46. per barrel. Brent crude, oil’s international benchmark, dropped as much as 2.12% to $119.68.

Bitcoin rose as much as 1.47% to $22,393. Ether prices jumped as much as 3.94% to $1,218.

Gold fell as much as 1.39% to $1,806.30 per ounce. The yield on the 10-year Treasury surged 13 basis points to 3.50%.

Fiscal Stimulus Bolsters US Economic Growth in Q1, Fastest GDP Growth Since 2003

The second-fastest gross domestic product growth since the third quarter of 2003, reported by the Commerce Department on Thursday, left output just 0.9% shy of its level at the end of 2019.

US Economy Grew Robustly in First Quarter

GDP grew at a 6.4% annual rate in the quarter, leaving the economy within 1% of its peak.

Asia-Pacific Markets Broadly Lower As Investors Turn Cautious

Asia-Pacific markets struggled for gains Friday as investors turned cautious, despite a positive finish stateside in the previous session.

World Shares Near Record High on Strong US Economic Data and Earnings

US economic growth accelerated in the first quarter, fuelled by massive government aid.

How the US Won the Economic Recovery

I looked for a country that got the economic response to Covid-19 right. I found the US.

Barclays Boss Predicts Biggest Economic Boom Since 1948

The UK is about to experience its biggest economic boom since the aftermath of World War Two, according to Barclays boss Jes Staley. His upbeat...

Buying American Is Easier Said Than Done: Will Biden’s Plan Juice the US Economy?

Joe Biden and Donald Trump don't agree on much, but this much they do: We should buy American products. But that's easier said than done.

Silver Down As Dollar and Yields on Bonds Rose as US Economy Advanced

Benchmark U.S. 10-year Treasury yields hovered near a more than two-week high, increasing the opportunity cost of holding non-yielding bullion.

Yellen Doesn’t See Biden Plan Creating Inflation ‘Issue’

President Joe Biden’s economic plan is unlikely to create inflation pressure in the U.S. because the boost to demand will be spread over a decade, said Treasury Secretary Janet Yellen.

Inflationary Pressure, Hawkish Fed Official Remarks Keep US Stocks on Leash

Dow added 2.4%, the S&P 500 gained 5.6%, and the Nasdaq jumped 7%. Dow was down 0.54% at 33,875 while the S&P was down by 0.72%. Nasdaq was down by 0.85%.