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- Wall Street stocks decline across the board as inflation fears weigh on positive sentiment
- European bourses, in contrast, push higher to set a record in a sixth-straight winning day
What’s on Focus in the Markets?
Stocks on Wall Street slipped on Wednesday while European bourses gained to record highs. Increased inflation jitters weighed on investor optimism in the US, leading the S&P500 to a decline of 0.3%. In addition, the Dow Jones Industrial Average and the Nasdaq Composite moved lower by 0.6%, and 0.3%, respectively.
Besides higher consumer prices, other factors have threatened to derail the strong performance of equities in the US. Supply-chain issues, for example, present a challenge for companies’ profits in the holiday quarter.
Over the previous months, strong earnings seasons had propelled stocks to dozens of record highs in 2021. The coming year, however, likely will not bring investors the same benefits.
Across the Atlantic, positive earnings reports helped traders shake off soaring prices in Europe. The pan-European Stoxx 600 rose 0.14% in its sixth-straight day of gains.
What’s the Outlook for Stocks?
This said, the US Federal Reserve is already preparing to taper, or reduce, its monetary support. The US central bank has been injecting as much as $120 billion in the US economy since March 2020.
As a result, stocks and other assets gained substantially but also inflation arrived. In order to cool down higher prices, the Fed is now considering hiking interest rates.
To this end, David Solomon, CEO of Goldman Sachs, said yesterday market greed is outpacing fear.
“Chances are interest rates will move up, and if interest rates move up that in of itself will take some of the exuberance out of certain markets,” Mr. Solomon said in an interview.
“When I step back and think about my 40-year career, there have been periods of time when greed has far outpaced fear — we are in one of those periods,” he noted. “My experience says those periods aren’t long lived. Something will rebalance it and bring a little bit more perspective.”
What’s the Latest News on Bitcoin?
In cryptocurrency trading, the price of bitcoin remained pinned near $60,000 early on Thursday. The original token is on pace to end the week with a loss of about 6% as traders have retreated this week.
Moreover, the entire cryptocurrency market is in decline for the week. In detail, about $300 billion has been wiped from the market valuation as the crypto space is now worth roughly $2.6 trillion.
Still, projections remain bright as analysts forecast buying momentum will return and lift bitcoin to a new high before the year ends.
What are Traders and Investors Following Today?
Looking ahead into the day, traders and investors will watch for movements in the EUR/GBP. The pair reached a 21-month low yesterday after UK inflation arrived at 4.2%, beating estimates.
Also, the US jobless claims report will be closely watched. It will reveal how many new first-time applications for unemployment benefits were received by the Labor Department last week. The report is likely to create heightened volatility in the US dollar.
Today’s Economic Calendar (EST times)
- 08:30 am, USD, Initial Jobless Claims
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