US Stocks Ended Lower to Tighter Monetary Policy Prospects, European Stocks Down to Interest Rates Rise And High Inflation.
London, Thursday, 14 July 2022
On Thursday, US stock indices ended lower as investors continued to examine the prospects for tighter monetary policy while keeping an eye on a number of weak bank earnings reports.
Fresh data indicated a larger-than-expected rise in US producer prices, escalating concerns of rash rate hikes after the CPI figure from the previous day exceeded expectations.
A recession was also predicted by the Fed's Beige Book, despite skyrocketing inflation.
The S&P 500 dropped 0.4 percent, the Dow dropped 100 points, and the Nasdaq closed at its level for a second straight session.
JPMorgan Chase (JPM) made headlines on Thursday after posting a second-quarter profit that fell by a wider-than-anticipated 28 percent.
The company attributed the decrease to a $1.1 billion provision for credit losses due to worries about a potential economic slump. As much as 5% of shares dropped after the bank released its earnings.
Morgan Stanley's stock also dropped after the bank failed expectations. Although Fed officials Waller and Bullard stated they would support a 75 basis point rate hike this month, which partially allayed concerns about a 100 basis point move, the three major indices nevertheless finished much higher from session lows.
As investors consider the likelihood of rising interest rates, skyrocketing inflation, and political unrest in Italy, European equities ended the day lower on Thursday, with the Dax losing more than 1.5 percent and the Stoxx 600 1.4 percent.
A higher-than-anticipated US inflation figure sparked betting that the Fed will raise interest rates by 100 basis points this month, driving the dollar higher and the euro below parity to a 20-year low.
A lower euro could result in increased inflationary pressures on the continent, prompting the ECB to increase borrowing costs earlier than expected and further weakening the already cooling economy's development.
The European Commission portrayed a bleaker picture of the economy, cutting growth forecasts and anticipating greater inflation for both this year and the following.
The 5-Star Movement boycotted the vote, which might lead to the fall of Mario Draghi's cabinet, and the Italian government won a vote of confidence in the Senate, which sent the FTSE MIb down 3.3%.
(Source: Trading Economics // Edit and reporting by: The Decision Maker – Finance editors)