Wall Street is preparing to close the first quarter of 2022 in red, suffering the first loss on a quarterly basis of the last two years, since the first quarter of 2020, the official start of the Covid pandemic.
In times of war, the US stock exchange is waiting for more precise information on the impact that the conflict between Vladimir Putin’s Russia and Ukraine will have on its economy, as well as on the economy of the whole world.
On a monthly basis, the S&P 500 and Nasdaq gained around 5% each in March, while the Dow Jones was up nearly 4%. Since the beginning of the year, however, in the entire first quarter, the Dow Jones and the S&P 500 have both lost about 3%, while the Nasdaq has slipped by more than 7%.
The fear of major US rate hikes by the Fed leading to a recession in the US continues to be a subject of debate, between those who trust the resilience of US economic growth and those who are more pessimistic. At 15.50 Italian time, the Dow Jones lost more than 81 points (-0.23%), to 35.147 points, the S&P 500 fell 0.22% to 4.592 and the Nasdaq dropped 0.27% to 14.404.
The crash in oil prices is the protagonist, which is explained both by the contraction of the PMI indices in China and by the rumors about the anti-inflation and anti-expensive gasoline emergency plan of the American president Joe Biden, ready to release up to 1 million barrels per day from US strategic oil reserves.
Biden, according to some sources, is ready to release US strategic reserves of up to 180 million barrels.
The indiscretion confirms the battle that the American president has launched against the surge in inflation in the States, caused by the jump in oil and other commodities.
The announcement of the emergency plan, according to White House sources, could arrive today, together with the presentation of other measures that the administration intends to launch to lower the prices at the pump. No details have emerged so far on the duration of the emergency oil withdrawal from US strategic reserves, but the sources consulted spoke of an intervention that could last several months.
However, the announcement of OPEC + reduced the losses, even if everything happened on schedule. The cartel ratified the planned increase in production of 432,000 barrels per day, continuing to ignore the effects of military aggression in Ukraine carried out by one of the members, namely Russia.
WTI prices fell 3.8%, revising $ 103.70 a barrel, after falling to the $ 101 area, while Brent fell more than 4% to $ 108.54.
From the macro front, the umpteenth litmus test of the acceleration of inflation in the USA has arrived: in February, the PCE core index – the Fed’s preferred parameter to guide its monetary policy – rose on an annual basis by 5 , 4%, compared to + 5.2% in January, thus accelerating the pace: the acceleration was lower than the 5.5% growth rate estimated by the consensus of analysts, but also confirmed the strongest trend since 1983 The headline PCE Index, on the other hand, advanced by 6.4% on an annual basis, from + 6.1% in January, but at a slower pace than the + 6.7% forecast by the consensus.
The PCE index was released with the dissemination of the data relating to consumer spending and personal income, from which it emerged that, again in February, the personal income of the United States rose by 0.5%, as expected, accelerating the pace compared to the unchanged figure of January. Consumer spending, on the other hand, grew by 0.2%, less than the estimated + 0.5%, but better than the -0.2% of the previous month. On a real basis, consumer spending, however, fell back by 0.4%, compared to + 2.2% in January.
The solidity of the US labor market confirmed:
In the week ending March 26, the number of American workers applying for unemployment benefits for the first time rose by 14,000 to 202,000, up from 188,000 in the previous week. The figure, slightly higher than the increase to 196,000 estimated by the consensus, rose from the low since 1969 tested the previous week.
Interest rates on Treasuries fell after the data: the ten-year rate fell to 2.34%; those at 30 travel at 2,467%; yields at two and 5 years also yield, a factor that avoids the phenomenon of the curve inversion, which has returned to normal both in the section between 5-30 years (which had reversed for the first time since 2006), and in the section between 2 and 10 years, which had reversed for just a few seconds, for the first time since 2019.