The Dow endures its longest streak of consecutive negative sessions since 1978
On the brink of the hotly anticipated interest rate reduction, Wall Street investors are treading cautiously. Several believe that a stricter approach from the U.S. Federal Reserve in the near future is imminent, which is favoring the dollar. Meanwhile, Bitcoin's surge persists.
One day prior to the U.S. interest rate decision, certain investors on Wall Street have stepped back. The U.S.'s benchmark index, the Dow Jones, slipped by 0.6% to 43,450 points on Tuesday. The tech-oriented Nasdaq dropped by 0.3% to 20,109 points, and the comprehensive S&P 500 fell by 0.4% to 6,051 points. This marked the ninth consecutive trading day of losses for the Dow, the longest losing streak since February 1978.
With an anticipated quarter-point interest rate reduction by the Fed, investors are now focused on the subsequent speech by U.S. Federal Reserve Chair Jerome Powell. According to Naeem Aslam of wealth manager Zaye, "We expect a 'hawkish' message. This means that investors may reevaluate their expectations for further aggressive rate cuts." He foresees a halt in the Fed's monetary policy easing.
Currency traders seem to be taking this into account as well. The Dollar Index, which gauges the dollar's worth against major currencies, rose by 0.2%. Conversely, the Euro decreased by 0.2% to 1.0489 dollars.
Cryptocurrencies are in high demand: Bitcoin increased by 0.5% to 106,614 dollars. "The next significant target is the 150,000 mark," said Zaye expert Aslam. "Many believe we will reach this number before Trump's inauguration." Throughout his presidential campaign, Donald Trump promised to deregulate the crypto industry and establish a national Bitcoin reserve.
Oil surrenders
Pfizer shares climbed by 4.7%. The pharmaceutical company anticipates revenues of $61 to $64 billion and earnings per share between $2.80 and $3.00 by 2025. The midpoint of the latter figure surpasses the market expectation of $2.88. Furthermore, the outlook offers the company room to boost its targets in the coming months, said BMO analyst Evan Seigerman.
The projection for the oil market is less optimistic: The International Energy Agency predicts a surplus of 950,000 barrels per day in 2025 due to growing production in some countries like the U.S. and Brazil. Simultaneously, a weakening Chinese demand poses a threat to reduce consumption by the top buyer. Some investors, therefore, are selling their gains from last week's rally, said IG analyst Tony Sycamore. The U.S. WTI crude oil price dropped by 0.7% to $70.20 per barrel (159 liters).
The unexpectedly robust U.S. retail sales figures had minimal influence. "This is simply another indication that U.S. consumers are still in good shape overall," said Eric Sterner, chief investment officer at wealth manager Apollo. Consumer spending is the primary driver of the world's largest economy.
Despite the anticipated interest rate reduction, Wall Street investors are adjusting their strategies. The Dow Jones, Nasdaq, and S&P 500 all experienced losses, marking a prolonged period of decline for the Dow. Meanwhile, the dollar is gaining strength, as currency traders anticipate a potential change in the Fed's monetary policy easing.
In contrast, Bitcoin's price is continuing to rise, with some experts predicting it may surpass the 150,000 dollar mark before former President Trump's inauguration. This bullish outlook for cryptocurrencies appears to be unrelated to the current state of the economy or the expected interest rate reduction.
