Downfall in Wall Street with the FED chair comments
So far, earnings reports are outstanding, and around 80% of US firms reported better-than-expected earnings. However, inflation concerns are still increasing to change the investors’ focus and ignore the possible gain across the market.
Also, with fast increasing treasury yields, now market participants are pricing on speedier interest rate hikes with three consecutive 50pb. This possible sharpest rate hike since 1982 gets more attention with yesterday’s Mr. Powell speech. Market understanding from the FED chair speech was a faster and sharper rate hike, even if it is still “front-end loading” and will be step by step with assessment at each stage according to the existing conditions.
US 10-year Treasury yield touches 2.96%, a level not seen since late 2018. 2 years and 30 years yields were also last seen at 2.74% and 2.97%, respectively. This fast rate increase pushed the technology-based NASDAQ to lose more than 2%. Gold price also, which usually moves against bond yields, tested 1,936 US before re-increasing towards $1,950 with worrying stock market price movements.
Last night on Wall Street, Dow Jones Industrial production was also in line with SP500; both lost 1% and 1.5%, respectively. With bulls seen on Wall Street earlier this week, we can say that now stock markets are fully torn between inflation and great Earnings.
As you can see in the below Daily chart of SP500, the price moves under 200 DMA sits at 4,500, while the OBV trend line is well below 20 DMA. Technically we can say that 200 DMA at 4,500 is the crucial pivot point, and as long as the price is below this level, we can say bulls have no hope for the higher levels.
