Wall Street falls just as quickly after the Fed

Wall Street has been significantly integrated for the foreseeable future, with the DJIA down 1.4% and the S & P 500 down 1.6% before trading on Thursday. Yesterday evening, the market responded strongly to the Fed’s surprising announcement, rising 1% in the Dow Jones and 2.5% in the Nasdaq. Therefore, after this short technical jump, this trend seems much less favorable while S & P remains near the “bare market” level threshold.

At Nymex, a barrel of WTI crude rose 0.5% to $ 114.7. One ounce of gold rose 0.6% to $ 1,831. The dollar index fell 0.3% against a basket of currencies. Following the recent purge, Bitcoin has recovered slightly at $ 21,000.

According to today’s report in the United States, housing starts in May 2022 were announced at a rate of 1,549,000 units, compared to 1.72 million market consensus and 1.81 million a month ago. Building permits were 1.695 million, compared to the 1.8 million consensus and 1.82 million in April.

The Philadelphia Federated Manufacturing Index was negative at -3.3 in June, while FactSet’s consensus was +5.

Weekly unemployed bills for the week ending June 11 were 229,000, while the revised reading consensus for the previous week was 218,000 and 232,000.

The Federal Reserve raised its key interest rate by three-quarters (75 basis points) yesterday Wednesday between 1.50% and 1.75%, the first gesture of this magnitude in 28 years in 1994. rice field! The US central bank has indicated that it will continue to raise the federal funds rate to 3.4% by the end of 2022 and 3.8% by the end of 2023 to curb long-underestimated inflation.

In a press release, the Fed’s Monetary Policy Committee (FOMC) said, “We are determined to bring inflation back to our target of 2%,” and “we are very careful about inflation risk.” Stated. Federal Reserve Chair Jerome Powell said at a news conference that he did not rule out an additional 75 basis point increase at the next meeting on July 26 and 27. “Given the current situation, it is likely that there will be a 50bp or 75bp rate hike at the next meeting,” he said, adding that the magnitude of the rate hike depends on economic indicators. However, he revealed that a 75bp hike would not be a “normal business”.

In a new economic forecast released Wednesday, FOMC members will raise the median federal funds rate to 3.4% at the end of the year, compared to the final forecast of 1.9% in March. I raised it significantly. .. The FOMC then expects interest rates to rise further, reaching 3.8% at the end of 2023 (compared to the 2.8% forecast in March) and returning to 3.4% in 2024 (2.8% forecast in March). ..

The Fed expects so-called “PCE” inflation to reach 5.2% this year (March forecast is 4.3%), while the central bank’s recommended core PCE index (excluding energy and food) is 4.3. Should rise by%. % Compared to the 4.1% forecast in March last year. Note that the Core PCE Index was released in May at 4.9%. This means that Fed officials expect a slowdown by the end of the year, affected by central bank tightening since March last year (+0.25 points in March and + 0.5pt in May). , Wednesday +0.75 pt).

Continued monetary tightening combined with the Fed’s shrinking balance sheet has made it possible to slow inflation, returning to 2.6% at the end of 2023 (2.7% for core PCE), with little change in forecasts. Compared to March. By 2024, inflation should return to 2.2% (2.3% for core PCEs), approaching the Fed’s long-term target of 2%.

The Federal Reserve currently predicts a rise in US GDP in 2022 will be only 1.7%, compared to the expected 2.8% in March, after a strong post-covid rebound of 5.7% in 2021. doing. Expected in March) and 1.9% in 2024 (expected 2% in March). But Jerome Powell said Wednesday that there was no general slowdown in the US economy and the Fed is “not trying to drive into recession.” “We are trying to reduce inflation to 2% and maintain a strong labor market,” he explained. “That’s what we’re trying to do,” he insisted.

“Overall economic activity seems to have recovered after the slowdown in the first quarter. Employment growth has been strong in recent months and unemployment remains low,” the Federal Reserve said in a statement. Remains high, reflecting pandemic-related supply and demand. ” Imbalances, as well as rising energy prices and broader price pressures, “the central bank commented.

The new Fed predicts that the unemployment rate will rise slightly to 3.7% in 2022, 3.9% in 2023 and 4.1% in 2024, 3.5%, 3.5% and 3.6%, respectively, but in the United States. The employment market should remain strong. Scheduled for March.

No surprises from the Bank of England on Thursday. Some observers expected a 50bp tightening, but the BoE raised the key rate by a quarter point at noon, the fifth increase since December. The nine-member Monetary Policy Committee voted 6 to 3 and raised the benchmark lending rate by 25 basis points to 1.25%. This is the highest level since January 2009.

BoE, the first bank in the world to embark on a rate hike cycle in December last year, has promised to act “strongly” as needed in the face of fraud-related risks. .. Months: “The scale, pace and timing of further key rate increases will reflect the Commission’s assessment of economic outlook and inflationary pressures.”

UK consumer price inflation reached 9% in April, reaching its highest level in 40 years, the BoE raised its forecast on Thursday, peaking just above 11% in October when energy prices rise again. I’m predicting.

“Although the risk of a recession is unpleasantly high, the central bank believes it will plummet and raise interest rates by 50 basis points in August. After that, policy makers move to 25 basis points in September and November. By the end of the year, the key rate will be 2.25%. “

As part of that, the market expects even more significant monetary tightening by the end of the year, setting a key rate of 3% by December. That could require three half-point and one quarter-point rate hikes in the remaining four meetings in 2022. This is an unprecedented pace.

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Jabil, a subcontractor of electronics manufacturing in the United States, announced that its third-quarter earnings, which ended at the end of May 2022, exceeded expectations and raised its financial forecasts in the process. Net income for the closing quarter was $ 218 million, or $ 1.52 per share, compared to $ 169 million in the year-ago quarter. Adjusted earnings per share reached $ 1.72, compared to a consensus of $ 1.62. FactSet’s consensus was $ 8.22 billion, while revenue increased 15% to $ 8.33 billion. Group CEO Mark Mondello said: “Given this ongoing momentum, we expect revenue in 2022 to approach $ 32.8 billion and adjusted EPS to be $ 7.45,” added Mondello.

Kroger, an American retail group, announced results that exceeded market expectations and raised its quotes, but could not prevent prices from plummeting before the Wall Street stock market. First-quarter net income was $ 664 million, or 90 cents per title, compared to $ 140 million in the year-ago quarter. Adjusted earnings per share was $ 1.45, while FactSet’s consensus was $ 1.29. Revenues reached $ 44.6 billion, compared with $ 41.3 billion in the previous year and $ 44.2 billion in consensus. Similar sales increased 4.1%, excluding gasoline, in line with market expectations. The group has raised its forecasts, expecting adjusted EPS to be around $ 3.85 to $ 3.95 and “same” sales excluding fuel to increase by 2.5 to 3.5%. FactSet’s consensus was on a similar growth of 3.2% and an adjusted EPS of $ 3.84.

Lebron is showing a deficit in front of the Wall Street stock market after being the subject of a final session of enthusiastic speculation. As feared, the group filed for bankruptcy yesterday Wednesday under Chapter 11 of US law. The cosmetics and fragrance group, managed by billionaire Ronald Perelman’s company McAndrews & Forbes, has $ 1 billion to $ 10 billion in assets and liabilities, according to a filing with the U.S. Bankruptcy Court in Southern New York. Listed. Bankruptcy filings are filed a few days after the Wall Street Journal reports that Revlon has begun negotiations with lenders prior to the maturity of its looming debt to avoid bankruptcy.

twitter. Elon Musk is speaking to all employees of social media network Twitter for the first time this Thursday since the announcement of his first $ 44 billion acquisition plan. Business Insider previously reported on the meeting, citing an email message from Twitter CEO Parag Agrawal. In a message, Agrawal states that staff can submit questions to businessmen in advance. Leslie Burland, marketing director of social networks, will act as a moderator during the event …

Therefore, Musk needs to confirm his intention to dominate Twitter during this General Assembly. A person familiar with the matter told The Wall Street Journal that the billionaire clarified his recent comments on remote work and is expected to address aspects of his Twitter strategy at the conference.

Tesla is raising prices in the meantime to deal with rising costs, sources say. Electric vehicle designers have raised prices for all US models in the face of supply problems.

Meta. Competition officials announced Thursday that former Facebook Meta has promised to put an end to practices that could raise concerns in the French advertising market. Therefore, competition authorities accept these commitments from Mark Zuckerberg’s group aimed at modifying that practice. Bloomberg says this will help Meta avoid high fines after offering to address French antitrust concerns about the online advertising market.

Meta, Google (Alphabet), Twitter and Microsoft have agreed on Thursday to strengthen their policy on “fake news” under pressure from the European Union. According to the European Commission, disinformation introduced in 2018. About 30 signatories have promised to comply with this regulation.

American fast-food giant McDonald’s will approve the prosecution’s proposal in France, which will impose a fine of € 1.245 billion, according to its lawyer. The fine will allow the group to avoid the criminal procedure for tax evasion in France from 2009 to 2020.