New York: All three major Wall Street indices fell on Friday, with investors wary of a more hawkish stance from the US Federal Reserve, while the dollar rose the strongest in more than a year and oil prices climbed steadily continued. After the week began near record highs, US equities have fallen steadily since Fed officials on Wednesday predicted that interest rates could rise earlier than previously expected. The Dow Jones industrial average fell 533.37 points, or 1.58%, the worst week for the blue-chip index since January. The S&P 500 lost 55.41 points, or 1.31%, and the Nasdaq Composite fell 130.97 points, or 0.92%. The MSCI World Equities Index, which tracks equities in 45 countries, fell 8.87 points or 1.24%.
Fear of early rate hike
The stock is trending downward after Wednesday’s policy update from the Fed, but the decline has sharpened after comments from Friday morning of the St. Louis Fed President James Bullard, who said he thinks the Fed can raise rates as fast as next year. The comments were later compensated later that day by Neel Kashkari, president of the Minneapolis Federal Reserve, who said he would only see interest rate hikes in 2024. The Fed maintained that it intended to continue unprecedented financial support until the labor market fully recovered, and that any acceleration from a stimulus exit was due to the strong gains the U.S. economy expected from the pandemic.
But the prospect of earlier interest rate hikes helped shift investors away from a stock market that was near record highs at the start of the week. ‘I’m not surprised to see the market sell a bit. “I’m never surprised, given the strong run we’ve had for such a long time, if you look at some periods of profit-seeking, ‘said Tim Ghriskey, chief investment officer at Inverness Counsel in New York.
The Fed stance fueled the U.S. dollar as the dollar index, which tracks the exchange rate against six major currencies, rose 0.43% on Friday to 92.314, the highest price since mid-April. The index is on course for its strongest weekly gain in about 14 months, as investors seek some security in the dollar from other currencies after a slight surprise from the Fed. Oil has shaken off earlier losses to offset recent gains following reports OPEC expects U.S. oil production to be limited this year. Brent crude futures rose 43 cents, or 0.6 percent, to $ 73.51 a barrel. U.S. West Texas Intermediate (WTI) oil rose 60 cents, or 0.8 percent, to $ 71.64 a barrel. Both measures had a weekly profit of about 1.1%. “Despite a complete return to pre-pandemic life in the US, energy companies are careful to keep their balance sheets in order and will remain disciplined to make commitments regarding new wells,” said Edward Moya, senior market analyst at OANDA, written. “The oil market does not have to worry about oversupply any time soon, and it keeps crude prices supported despite a wide sale of commodities.” Long-term US Treasury yields fell on Friday as the Fed market picked up on Fed news, with yield curves declining on the bet that the Fed would move faster to tackle persistent inflationary pressures. The standard note for ten years was last at 1,445%. The Fed took its toll on safe-haven gold this week. Spot gold fell 0.61% to $ 1,762.63 an ounce, with prices up about 5.7% during the week. US gold futures fell 0.3% to $ 1,769 an ounce.