Market Wrap – Market Mood Swings

The market mood on Wall Street remained volatile as US equity market swung wildly, with the Nasdaq opening heavily in the red and then surging by over 100 points.

Fed Chair delivered his testimony for the second day and said that “We expect the labour market to gradually cool” and he “Also expect inflation to move down this year.”

He Repeated that strong majority of committee believes two more rate hikes before year end and that the “Decisions last week was to move more slowly”.

On inflation he noted during his drilling before US congress that he “Will do what it takes to get inflation down to 2% over time”. This further hinted at more hikes to comes.

On the jobs front the number of Americans filing for unemployment benefits were at 264,000 on the week ending June 17th, above market expectations to match the prior week’s upwardly revised value, the highest since October 2021.

The result aligned with other recent data that reflects some softening in the US labour market after a prolonged period of stubborn tightness, as US businesses start to feel the impact of the Federal Reserve’s aggressive tightening campaign.

The four-week moving average, which removes week-to-week volatility, rose by 8,500 to 255,750. On a seasonally unadjusted basis, claims fell by 1,237 to 250,03

Existing home sales in the US, which include completed transactions of single-family homes, town homes, condominiums, and co-ops, edged 2.3% higher from the previous month to a seasonally adjusted annual rate of 4.3 million in May of 2023, surpassing market estimates of 4.25 million. 

NAR Chief Economist Lawrence Yun said, “Mortgage rates heavily influence the direction of home sales,” and “Relatively steady rates have led to several consecutive months of consistent home sales.” 

Earlier today the Bank of England hiked rate and The Swiss National Bank raised its policy interest rate by 0.25 percentage points to 1.75 percent during its June meeting and signalled the possibility of further rate hikes in the future to ensure price stability over the medium term.