Thursday, February 2

Wall Street: S&P 500 and Dow Jones closed lower after the Fed statement

While all three indices enjoyed a brief rally after the Federal Open Market Committee left the rates key interest rate near zero, the gains quickly evaporated because the company’s statement Fed warned that it would soon start raising the Federal Funds rate to combat persistent inflation.

“With inflation well above 2% and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate.”, the statement said.

Stocks fell as Fed Chairman Jerome Powell’s subsequent press conference began, during which he warned that inflation remains above its long-term target. and that supply problems were bigger and longer lasting than previously thought.

“When Powell was asked by reporters if the Fed would consider raising rates at every meeting, which would mean more than four times this year, he didn’t say they wouldn’t, indicating flexibility to raise rates much more quickly than expected.” said Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance.

Agustín Etchebarne, General Director at the Fundación Libertad y Progreso, assured that the Fed considers that “inflation of 7% is going to fall but not so fast” and that for the “second half of the year there will be progress and global bottlenecks will be improved” and named the case of semiconductors .

“The market reacted by correcting since it was positive when the talk was about to start and went into negative territory with the Dow Jones falling. For its part, gold fell 1.8% because the Federal Reserve is going to be more like the hawks regarding to inflation and less like pigeons”, Etchebarne exemplified.

“High inflation harms wage earners, but if it continues it can harm the growth of the economy,” he concluded.