Sherif Adel (Al-Ittihad)
The major US stock indices continued to rise for the second week in a row, as analysts considered the Fed’s strong moves to fight inflation and the consequent rise in US interest rates exceeded.
Despite the rise in the yield on the benchmark US Treasury bonds for ten years, touching at the last moments of trading in the week 2.5% for the first time since April 1, 2019, the Dow Jones Industrial Average achieved a weekly increase of 0.3%, and the S&P 500 gained 1.8% of its value, while The Nasdaq rose 2% during the same week. With these rises, the gains of the S&P 500 index during the month of March reached 3.9%, erasing all the losses that were achieved since the start of the military confrontations in Ukraine on the twenty-fourth of last February.
With the Federal Reserve deciding to start a new cycle of raising interest rates on its funds, the S&P 500 rose 6.6%, the highest rate of increase since the start of any rate-raising cycle since World War II. During the eight days that began on March 16, when the Fed raised interest rates for the first time since 2018, the S&P 500 rose in six of them, while the decline was in only two days.
Despite his conviction that imposing more sanctions on Russian oil will cause the US economy to stagnate, Mark Haifeli, an investment officer at UBS, considered that “the recent stock price hikes came as a result of investors feeling that there is no alternative to investing in stocks, especially with the continued rise in the rate of shares.” Inflation and bond yields. On Monday, Federal Reserve Chairman Jerome Powell confused the markets by declaring that he could “raise the interest on the bank’s funds during the upcoming meetings by half a percent, instead of the quarter percent that the markets currently reflect, if necessary.” However, the following days saw the return of stocks to rise .
The recent positive data from the US economy contributed to overcoming the obstacles to raising interest rates, as the latest jobless claims, which were announced by the US Department of Labor on Thursday, fell to their lowest levels since 1969, while analysts expect that the jobs data expected to be released next week will continue to show the strength of the market. American work.
In the same direction, earnings estimates for American companies rose during the current year 2022 with expectations of a return of economic activity for the first time to pre-virus levels, which prompted American investors to look at the US stock market as the best way to hedge against inflation risks.
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