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U.S. stocks extended this week’s downtrend Wednesday to close a choppy session with losses as the prospect of sustained higher rates and slowing growth continued to plague investor sentiment.
The S&P 500 (^GSPC) slumped 0.2%, ending a fifth straight day lower, while the Dow Jones Industrial Average (^DJI) capped trading at the flatline. The technology-heavy Nasdaq Composite (^IXIC) declined 0.5%.
In commodities markets, oil extended losses to close around $72 per barrel after a decline of roughly 10% this week to the lowest level since January.
Fears are growing that economies are in for a rough time ahead as feverish inflation and the bitter interest rate medicine being used to bring it down take effect,” Hargreaves Lansdown senior investment and markets analyst Susannah Streeter said in a morning note, pointing also to recession warnings from U.S. bank bosses and gloomy trade data in China. “Despite today’s easing of restrictions, it’s clear China’s Covid nightmare is not at an end.”
A chorus of downbeat remarks from Wall Street leaders on Tuesday further weighed on already slumping sentiment this week as many expressed concerns over the toll of inflation and elevated interest rates on U.S. consumers.
JPMorgan Chief Executive Officer Jamie Dimon said the $1.5 trillion in excess savings across Americans’ bank accounts were being eroded by rising prices, while warning the dwindling disposable cash may “derail the economy and cause this mild or hard recession that people are worried about.” Bank of America chief Brian Moynihan echoed a similar message, indicating that while consumers are still spending money, the pace is beginning to slow.
Meanwhile, Goldman Sachs (GS) CEO David Solomon projected stocks will barrel lower in 2023 and placed the probability of a soft landing at a mere 35% – a view at odds with in-house economists at his investment bank, who anticipate in their baseline forecast that the U.S. will narrowly avoid a recession next year.
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originally published at Finance - RSV News