Markets down on booming economy, 0.5% rate hike possible

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US stocks are frightened by a sustained economic boom and hawkish rhetoric from the Federal Reserve.

• US stocks fell on thursday, Microsoft, Disney and Tesla were weighed down. followed by the Asia-Pacific market, price drop on fridayThe Australian S&P/ASX 200 fell 0.81% after the Australian central bank hinted at further rate hikes.

• The US Producer Price Index, which measures inflation at the wholesale level, 0.7% increase in JanuaryIt was the biggest gain since June and beat economists’ expectations by 0.3 points.

• Investment bank China Renaissance, which has advised mergers of China’s biggest tech companies, said: Unable to contact CEO Bao FanChinese financial news outlet Caixin said Cong Lin, the former chairman of the bank’s subsidiary, was under investigation.

• Tesla is 362,758 vehicles recalled Equipped with experimental driving assistance software. The company warned that the software, known as a full self-driving beta, could cause vehicle crashes.

• Professional Crypto is comeback in 2023According to Bernstein analyst Gautam Chugani, investors may see recent regulatory action in the US less stringent than expected.

Looking at the January numbers, the US economy is running at full capacity. In short, the lowest unemployment rate in 53 years. Personal consumption is recovering despite price hikes. And overnight, we find that the Producer Price Index has risen to its highest level in eight months. means to remain

For a while it seemed as if the market could accept it — and even accept it as the new normal where economic growth can comfortably exist with inflation above 2%. The market rose each time the report exceeded expectations.

Until yesterday. The market finally collapsed. The Dow Jones Industrial Average is down his 1.26%, the S&P 500 is down his 1.38% and the Nasdaq Composite is down his 1.78%. “It should come as no surprise that markets will take a breather in the coming months as hopes for the dovish Fed fade,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley.

In fact, it’s not just that the Federal Reserve pigeons may be flying. Markets widely expected and priced in a 25 basis point rate hike at the Fed’s next two meetings. Yesterday, the forecast was far off.

St. Louis Federal President James Bullard said Thursday that “he supports a 50 basis point rate hike and argued that we should get to a level that the Commission deems sufficiently restrictive as soon as possible.” Stated. Cleveland Fed President Loretta Mester echoed Bullard’s hawkish temperament and said he wanted higher rates. Neither Mester nor Bullard voted on the Federal Open Market Committee this year, but their sentiments may indicate the Fed is more determined to keep inflation in check.

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