All three key indices of Wall St. have logged broad-based gain on Friday, as there has been a shimmering sign of hope over a plausible pause on US Fed’s aggressive rate-hike plan. At this standpoint, the US Federal Reserve has been set to hike rate by 75 bps until September, while by end-2022, US Fed has been expecting its benchmark borrowing cost to stay between 3.4 per cent to 3.8 per cent.
Such kind of hawkish US Fed stance alongside a rise in labours’ wages at a breakneck pace amid a much-squeezed US labour market, could wreak havoc on small businesses and might eventually lead to an inevitable recession.
Earlier in the week, a consortium of data analytics firms had raised the risk of a US recession by 2023 to 30 per cent. Nonetheless, in the day’s sharp turnaround in the Wall Street was almost entirely galvanized by a rally in Bank stocks following Fed’s stress test, while a latest rebound in commodity prices had allayed concerns of an ultra-hawkish US Fed stance up to some extent.
Wall St. ends higher after Fed’s stress test
Citing statistics, in the day’s Wall St. wind-down, trade-sensitive Dow jumped 2.70 per cent to 31,505.59 and Wall Street bellwether S&P 500 added 3.08 per cent to 3,912.71, while tech-heavy Nasdaq skyrocketed as much as 3.38 per cent to 11,612.40.
Over the week, Dow mushroomed 5.31 per cent and S&P 500 soared 6.71 per cent, while Nasdaq climbed 8.31 per cent. Meanwhile, adding that Friday’s relief would more likely to be short-lived, a head trading strategist at TD Ameritrade, Shawn Cruz said, “Some of the moves, the sellers just get exhausted so you don’t have as much capital moving out…But I think I would not encourage anyone to start going in with both hands at the moment, because we have seen this repeatedly where these things can reverse themselves pretty quickly”.