Investors Brace for Impact: Fed Hints at Further Interest Rate Increases

The S&P 500 fell in value over the course of the week following Jerome Powell’s testimony to Congress in which he revealed that all members of the Federal Open Market Committee had reached a consensus regarding the intention to increase interest rates before the year’s end.

In the general market gauge, June saw a significant decrease, which brought an end to several weeks of strong performance. Other indexes, such as the Dow Jones and Nasdaq Composite, also struggled during the week, with the former dropping by 2% and the latter experiencing a drop of over 2.6% by the end of the week.

During the past five days of trading until June 21st, the technology sector encountered a loss of 2 billion dollars, marking the largest reduction within the last 10 weeks.

After the Federal Open Market Committee’s decision to stop increasing interest rates in March 2022, investors from various fields felt positive. Although Powell’s remarks were met with disappointment, the optimism continued among investors.

It is expected that central banks all over the world will raise interest rates once more due to the continuation of inflation in various economies.

Narendra Modi, the leader of India, being in Washington, D.C., was a noteworthy occurrence as the Biden administration gave him tremendous attention. President Biden highlighted the importance of the relationship between the United States and India, which is expected to be essential for this century, as India aims to establish its position as one of the world’s most influential financial and military powers.

During the earnings call of FedEx Corp., there were mixed reactions regarding the news that the company’s revenue for the fourth quarter decreased by 10.2% or $21.9 billion, falling short of the analysts’ predicted revenue of $22.7 billion. Nevertheless, the company surpassed the estimated earnings per share of $4.89 by achieving $4.94 per share.

Remember Bitcoin?

The digital currency grew substantially, with a weekly increment of around 20% until Friday. It went beyond the $30,000 mark, reaching $31,200 after various financial organizations revealed new cryptocurrency initiatives.

What’s next

The forthcoming report on New Home Sales will give an understanding of the state of the housing market in May, whereas the Personal Consumption Expenditures index, due on Thursday, will provide a view of the inflation measure that the Federal Reserve is inclined towards.

Walgreens, a company specializing in pharmaceuticals, is scheduled to disclose its profits on Tuesday. The following day, Micron Technologies, a manufacturer of semiconductor chips, and General Mills, a dominant player in the food sector, will also divulge their financial outcomes. On Thursday, Nike, an industry leader in sportswear, will reveal their earnings. Lastly, on Friday, Constellation Brands, a major producer of beverages, will report its financial standing.