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Wall Street plunges ahead of Fed meeting, US and Europe may raise interest rates this week, CNN predicts Fed may “blow up the economy” to fix inflation, Americans seeking inflation-proof investments, and more financial news.
On the final day of October, the Dow Jones Industrial Average dropped more than 200 points in early action on Monday, as investors anticipate a big week which includes a two-day Federal Reserve meeting and a new jobs report by the Department of Labor arriving on Friday, Investor’s Business Daily reported.
After the opening bell on Monday, the Dow Jones Industrial Average fell 0.7%, the S&P 500 moved down 0.8%, and the Nasdaq lost 1% in morning action.
The 10-year Treasury yield moved higher to 4.04%. Oil prices declined by nearly 2% as West Texas Intermediate futures held just above their 50-day moving average, just above $86 a barrel.
Wall Street is predicting that the Federal Reserve will raise interest rates by three-quarters of a percent this week for the fourth time in a row. The Fed has said it won’t pivot, that is, will not slow its pace of rate increases until the superheated labor market shows clear signs of slowing, Business Investor’s Daily reported. Investors’ sentiment shows an 81% probability of a 75 basis point hike, according to the CME.
Not only that, but it is anticipated that the Bank of England and other European bankers may do the same, CNN reported.
Last week, European Central Bank officials announced another massive hike (three-quarters of a percentage point), marking an increase in interest rates at the fastest pace in the history of the euro currency. On Thursday, it’s likely that the Bank of England could do the same.
The Eurozone’s annual rate of inflation hit a record 9.9% in September, up from 9.1% in August, and an estimate for October showed inflation accelerating to 10.7%.
Wall Street analysts are anticipating that the Federal Reserve is likely to raise interest rates by three-quarters of a percentage point again on Wednesday, the fourth straight hike by that amount, and believe it is possible another increase of the same magnitude could come in December.
CNN made a prediction and a bold headline on Sunday, stating: “The Fed may have to blow up the economy to get inflation under control.” The report stated that as inflation pressures take longer to come out of the system, the Fed may be prompted to continue its aggressive rate hike stance, even if such a policy risk causing a recession down the road.
As inflation remains high, and as the Fed continues to tighten its monetary policy and is poised to enact its fourth consecutive interest rate hike, Americans are taking steps to try to inflation-proof or simply buoy their financial situation. Many Americans are buying precious metals such as gold and silver, as these assets have long served as hedges against value loss and inflation for centuries.
One method of gold investment becoming more popular is a gold IRA and these are the 6 best gold IRA companies in 2022, according to Investopedia.
This week, the U.S. Treasury’s website was overwhelmed by Americans flocking to buy I Bonds with a rate of 9.62% before the deadline of October 28. Many Americans are looking for safe investments as well turning to bonds and treasuries.
