The global inventory gauge fell for a fourth straight day while the dollar rose as the European Central Bank boosted the interest rates on Thursday, signaling the need for further monetary tightening, a day after the United States Federal Reserve also hiked interest rates.
United States Government bond yields fell, and oil prices stabilized after falling sharply earlier in the week.
In addition to investor displeasure at the central bank’s announcements, Wall Street stock indexes also took a hit as US bank stocks fell again after the collapse of the third-largest regional bank this weekend.
European stocks ended lower after the ECB, the central bank of the 20 countries that divide the Euro, boosted interest rates by 25 basis points to 3.25%, signaling that further tightening would be needed to control inflation.
Unlike the ECB, the Fed has hinted that its marathon walking cycle may end.
While the idea of a break in the United States rate boost is good news for US investors, indicating the economy is slowing, according to the economist and portfolio schemer at the New York Life Investment in New York, Lauren Goodwin.
“This balance between stability in the potential interest rate and the growing risk of a recession is what markets are trying to absorb today,” Goodwin said.
The economist saw the Fed’s magic to tighten credit conditions in particular as confirmation of his expectations of an economic slowdown.
According to Goodwin, it is very unlikely that we will avoid a recession, and we are headed for a recession in the coming months.
Stock Market Analysis
The Dow Jones Industrial Average declined by 0.68%or 286.5 points to 33,127.74
The S&P 500 lost 0.73% or 29.53 points at 4,061.22
The Nasdaq Composite declined by 0.49% or 58.93 points to 11,966 points.
All three major Wall Street indices posted losses for the fourth straight day. This loss is the Nasdaq’s longest losing streak since December.
The MSCI World stock index declined by 0.47%, reflecting its first four-day futile streak since mid-March.
Emerging market stocks, on the other hand, increased by 0.7% after refusing three simple sessions.
The dollar index increased by 0.188%, and the Euro declined by 0.43% to $1.1011. The Japanese yen increased by 0.39% versus 134.16 per dollar.