The major stock indices on Wall Street in New York City rose on Monday, after suffering a significant drop the previous week, although trading was choppy as investors awaited the choices and statements of the Federal Reserve (Fed), the central bank of the United States, regarding interest rates.
The slowdown in growth of the world economy has a negative effect on the capital market, as the International Monetary Fund (IMF) and the World Bank warned about a week ago. This effect is having a negative impact on the global financial system.
Because of these factors, the values of stocks traded on the majority of European stock exchanges went down on Monday. The London FTSE index dropped by 0.42 percent, bringing it down to 7,236 points, while the Paris CAC index down by 0.26 percent, bringing it down to 6,061 points. On the other hand, the Frankfurt DAX index rose by 0.40 percent, bringing it up to 12,803 index points.
The Dow Jones index rose by 0.64 percentage points to 31,019 points in New York, while the S&P 500 index grew by 0.69 percentage points to 3,899 points and the Nasdaq index rose by 0.76 percentage points to 11,535 index points.
Wall Street indices recovered some of their losses Wednesday, but traders remained cautious after suffering their largest weekly loss since June the previous week. The low trade volume is a clear indication of this fact. Only 9.58 million shares were traded by owners, making this day’s volume the sixth lowest of the year.
This is a direct result of the uncertainty that investors have over the hike in interest rates that will be implemented by the Federal Reserve in the United States. The two-day meeting of the Federal Reserve in September, which begins on Monday and comes to a close on Wednesday, is expected to conclude with the central bank deciding to raise key interest rates by 0.75 percentage points for the third time in a row.
However, following the release of data the previous week showing that inflation in the United States for the month of August was greater than anticipated, there is speculation that the Federal Reserve may hike interest rates by one full percentage point.
We are waiting for the leaders of the central bank to decide and provide an order on Wednesday, and everyone’s attention is focused on the Federal Reserve.
Josh Markman, a partner at Bel Air Investment Advisors, told Reuters that he believes trading will be slow until then. ” I expect trade will be sluggish until then,”
Investors are concerned that inflation could persist at high levels for a longer period of time than anticipated, which would force the Federal Reserve to tighten monetary policy again in the following year. And that might send the economy into a deeper slump than it was already in. Given that it has declined quarterly for the past two quarters, the economy of the United States is technically already in recession; yet, this recession is still very mild at this point.