Money Flow – US stocks fell after Jerome Powell acknowledged that the central bank’s campaign to raise interest rates could lead to an economic downturn.

Investors are watching closely for signs that the Fed will continue its campaign to reduce high inflation by raising interest rates. Central bank officials last week agreed to raise their base rate by 0.75 percentage points, their biggest increase since 1994.

On Wednesday, the broad US stock index fell 4.90 points, or 0.1%, to 3,759.89. The Dow Jones Industrial Average fell 47.12 points, or 0.2%, to 30,483.13. The technological Nasdaq Composite decreased by 16.22 points, or 0.1%, to 11053.08.

Mr Powell testified before Congress on Wednesday and is scheduled to testify again today. He said the central bank plans to continue raising interest rates until it sees clear evidence that inflation is slowing to its 2% target.

The economic downturn is “certainly an opportunity,” Mr Powell said during a congressional hearing on Wednesday. “We are not trying to provoke and we do not think we will have to provoke a recession, but we think it is absolutely necessary” to curb inflation.

Separately, the president of the Federal Reserve Bank of Philadelphia, Patrick Harker, said on Wednesday that the US economy may see a modest contraction in growth, but he expects the labor market to remain strong.

Stocks have been spinning in recent weeks as double fears – rising inflation and slowing growth – loomed over markets. The S&P 500 is on track for its worst first half of 1962. US stocks rose on Tuesday, offering investors a respite from whipsaw trading, which led to a drop in stocks and cryptocurrencies.

Investors were looking for assets considered safer to hold on Wednesday, such as US government debt. In the bond markets, the yield on US 10-year benchmark government securities fell to 3.155% from 3.304% on Tuesday. Yields fall when prices rise.

In energy markets, crude Brent, the international benchmark for oil prices, fell 2.5% to $ 111.74 a barrel, its lowest settlement value in a month.

Oil prices have been compounded by fears that the Fed’s efforts to fight inflation will slow the economy and reduce demand for fuel. However, energy prices remain close to historically high levels, as Russia’s invasion of Ukraine has pushed Western countries away from Moscow’s supplies.

Falling oil prices from their peaks could help stocks stabilize in the short term as investors look for clues that inflation may start to fall.

The fall in crude oil prices has affected the shares of energy companies. Shares of Occidental Petroleum fell $ 2.10, or 3.6%, to $ 55.77. Shares of Halliburton fell $ 1.46, or 4.4 percent, to $ 32.09. The energy sector of the S&P 500 fell 4.2% during the day.

Investors are worried that deteriorating economic data could precede a slowdown in US growth, limiting insignificant costs. Economists have significantly increased the likelihood of a recession, now putting it at 44% over the next 12 months, a level that is usually seen only on the brink or during a recession.

Fears of a recession have also hit base metal prices. Copper fell 2.3% to $ 3.95 a pound, its lowest level since February 2021.

The value of bitcoin, the world’s largest cryptocurrency by market value, fell 4.5% as of 5 p.m. ET at $ 19,898.29. Cryptocurrencies have fallen recently amid widespread interest in investing in speculative assets and concerns about the future of some crypto companies.

Shares of the cryptocurrency exchange Coinbase Global fell $ 5.58, or 9.7%, to $ 51.91.

Stoxx Europe 600 fell 0.7%. In Asia, major indexes closed at a loss. South Korea’s Kospi was down 2.7 percent, China’s Shanghai Composite was down 1.2 percent and Japan’s Nikkei 225 was down 0.4 percent.

 Dealer Anatoliy Pavlov

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