Sherif Adel (Washington) The markets listened to the warnings of Raj Subramaniam, CEO of the shipping giant FedEx, that the global economy is about to enter a recession, after the end of trading on Thursday. Nasdaq and S&P 500 indexes since last June, while some are still waiting for more losses. Despite the last hour’s gains, the three major indices ended the trading yesterday with a loss, deepening its weekly losses that exceeded 5.5% for the Nasdaq index, and 4.8% for the S&P 500 index, while the Dow Jones only lost 4.1% of its value.
high inflation
The week’s losses began on “Black” Tuesday, following the announcement by the US Labor Office that the consumer price index rose by 8.3% compared to last year, while expectations were within 8%, which some considered paving the way for the Federal Reserve to further tighten monetary policy. Specifically, by raising interest rates. Tuesday was the worst day for US stocks since June of 2020, which witnessed the beginning of the strong spread of the Covid-19 epidemic, and many economists at the time predicted the collapse of the American and global economy.
Global demand slumps
And on Wednesday, the FedEx president announced a revision of the company’s revenue forecast for the year, and the trend towards cost pressure, after he sensed a decline in global demand for his company’s services. Many analysts consider the transportation sector, to which FedEx belongs, one of the primary indicators through which it can be concluded that the economy is about to enter a recession. FedEx stock ended Friday’s trading, losing more than a fifth of its value, which was at the end of trading on Thursday, while several other companies in the sector fell by about five percent.
Kaley Cox, US market analyst at eToro, confirmed that US markets are currently witnessing cases of nervousness due to investors’ fear of the US economy being affected by the tensions of the global economy, adding in an interview with CNBC economic news channel, “I think this is what I woke up to.” Investors recently in America.
Fed meeting
Investors are looking forward to the meeting of the Federal Reserve (the US central bank) scheduled for next Wednesday, as the markets currently reflect expectations of 80% to raise the interest rate on the bank’s funds by 0.75%, in addition to the 2.25% raised since March, in the most tight monetary policy the country has known since 1980s, while the remaining 20 percent expects to raise 1%.
The recent losses of US stocks, coinciding with the high interest rate, caused the exodus of billions of dollars from stock funds to bond funds, in a return to the famous combination of 60% stocks – 40% bonds, which most investors had abandoned since the middle of last year, with the increasing Rate hike expectations.
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