The stock futures and the broader market is bound to see more pricing pressures with the proposed interest rate hike as planned by Federal Reserve officials.
The United States stock market recorded a mixed performance on Tuesday as the futures tied to major indices rebound despite a persistent bearish turn. The futures tied to the S&P 500 (INDEXSP: .INX) soared by 0.38% with the Futures tied to Nasdaq 100 shot upward by 0.5%. Dow Jones Industrial Average (INDEXDJX: .DJI) went up by 101 points or 0.32%.
The growth in the Futures indicators was by far antagonistic to the actual performances of the major market indices. The S&P 500 continued its downtrend, closing Monday’s session down 0.67% to 4,030.61. The Dow Jones lost 184.41 points atop a 0.57% drop to 32,098.99. The Nasdaq Composite (INDEXNASDAQ: .IXIC) was no better as it lead the losses on Monday. The Nasdaq Composite was down 1.02%, shedding 124.04 points to close at 12,017.67.
The market reaction is still based on the hints from different Federal Reserve officials that have confirmed that there are going to be more aggressive rate hikes in the coming weeks.
“Investors are coming to terms with the idea that the Fed is serious about curbing inflation, even as recent data suggests inflation is starting to decline,” said Rod von Lipsey, managing director at UBS Private Wealth Management. “We believe the market’s summer rally was ephemeral and continue to recommend that investors remain selective and focus on defensive stock sectors like health care and dividend-paying stocks.”
For now, the Federal Reserve is not winning the fight against inflation considering the reading for July was pegged at 8.5%. The fight will be considered won when the figure is below 4%, a benchmark that is even higher than the 2% that is set as the standard.
Stock Futures amid Inflationary Pressures
The stock futures and the broader market is bound to see more pricing pressures with the proposed interest rate hike as planned by Federal Reserve officials. At this point, the fight against inflation will continue for most major economies even though it tilts the financial ecosystem into unprecedented turmoil.
Experts believe the US is on the brink of slipping into a recession with the current economic data not pointing well.
“We’ll definitely have a recession as the lagged impacts of this major monetary tightening start to kick in,” Stephen Roach, who was formerly chair of Morgan Stanley Asia told CNBC’s “Fast Money” on Monday. “They haven’t kicked in at all right now. “The unemployment rate has got to go probably above 5%, hopefully not a whole lot higher than that. But it could go to 6%.”
Amidst the broader uncertainties in the market, investors are being advised to be very cautious in their asset picks. Typically, stocks or investments with a historically volatile performance are shunned, leaving Bitcoin (BTC) and digital currencies out in the cold. Profitability is the ultimate goal for many, however, staying afloat remains the target in this harsh economic climate.