A clear start for Wall Street, with the Dow Jones at -1.9%, the S&P500 at -2.1% and the Nasdaq at -2.4%, in the aftermath of the Federal Reserve meeting which raised interest rates 50 basis points, as expected, bringing them into the 4.25-4.5% range.
Chairman Jerome Powell stressed that there is still a long way to go to get inflation under control and dismissed the hypothesis of a cut in the cost of borrowing next year, paving the way for another half-percentage point tweak at the meeting in February.
Furthermore, projections by FOMC officials have revealed a terminal rate in 2023 in the range of 5.0-5.25%, a level higher than previously indicated and market estimates.
Focus also on the latest macro data, which show a drop in retail sales (-0.6% on a monthly basis against an estimate of -0.1%) and in industrial production (-0.2%) in November, but also weekly jobless claims down by 20,000 to 211,000, underlining the resilience of the labor market in a context of weakening economy.
Not only the Fed, but also the ECB and the Bank of England raised rates by 50 basis points, signaling further hikes.
In terms of currencies, the euro/dollar strengthens in the 1.07 area while among raw materials, oil falls back with the WTI at 76.25 dollars.