Stocks are still jigging Wednesday afternoon. They fluctuate between small gains or losses in Wall Street trading, due to concerns about inflation, rising interest rate and a possible recession.
As of 2:43 p.m. Eastern Time, the S&P 500 had gained 29 points or 0.8%. Both the Dow Jones Industrial Average (DJIA) and Nasdaq went up 0.6%.
Technology companies gained ground, which helped to offset losses at energy companies. As crude oil prices fell, chipmaker Nvidia saw a 1% increase and Exxon Mobil saw a 2% drop.
Major indexes have seen sharp swings between losses and gains on an hourly and daily basis. However, the broader market is still stuck in a deep slump which has dragged S&P 500 into a bearish market, more than 20% below its highest point.
Wall Street is concerned about the Federal Reserve’s efforts to control inflation and the possibility that its plan could lead to a recession.
Businesses and consumers have been affected by inflation throughout the year. After Russia invaded Ukraine in Feb., price increases increased. China also locked down key cities to stop rising COVID-19 incidences. This worsened the supply chain problems.
Inflation was worsened by rising oil prices, which sent gasoline prices to new highs in the U.S. The U.S. crude oil price is still up 27% over the previous year, but they have been falling throughout the week which is a welcome sign for those who hope for an indication that inflation may be decreasing.
U.S. crude oil prices fell 3.2%. Prices fell below $100 per barrel on Tuesday for the first time since May.
In an effort to curb inflation, central banks have increased interest rates. The Fed has been especially aggressive in shifting from historically low interest rates during the pandemic to unprecedentedly high rate increases now. There are concerns that the central banking could push the envelope and force economic growth to halt, causing a recession.
Inflation is likely to be rising, and energy prices could fall in the coming weeks.
“This relieves the Fed of its pressure,” Katie Nixon, chief investment officer at Northern Trust Wealth Management said. “If gas prices drop, it will affect consumer sentiment which could allow the Fed to take at least some of the pressure off.”
Wall Street will receive an update from the Fed this afternoon, when it releases minutes of its most recent policy meeting.
Investors closely monitor economic data to find clues about the Fed’s future position. This includes information on inflation’s trajectory and impact. In a sign of a healthy employment market, a government report on May’s job openings beat expectations. The growth of the U.S. service industry was less than anticipated in June, according to a report.
Wall Street will closely monitor Friday’s U.S. government release of June employment data.
