Stocks made a massive rebound yesterday following Powell’s testimony to the House Financial Services Committee concerning the Fed’s preparedness in containing the shooting inflation rate. Although he did not clearly state the anticipated path to be followed for the interest rates, the market celebrated some relief as he instilled on the confidence that the hikes will be small and gradual. “The near-term effects on the U.S. economy of the invasion of Ukraine, the ongoing war, the sanctions, and of events to come, remain highly uncertain. Making appropriate monetary policy in this environment requires a recognition that the economy evolves in unexpected ways. We will need to be nimble in responding to incoming data and the evolving outlook,” he said in his testimony acknowledging the flux that has hit the U.S. market in the recent past.
The news was met by feisty trades that saw all the 11 S&P 500 sectors surge led by the financials and materials sectors that increased by 2.55% and 2.24% respectively. The Dow shifted upwards 596.40 points, a move that reversed its 597.65 decline on Tuesday. All the 30 stocks in the index gained except Visa Inc. that lost 0.24%. NASDAQ gained 1.62% to close at 13,752.02 points while S&P 500 increased 1.86% to 4,386.54%.
The rise and fall trajectory in the stock market is expected to continue as the Russia-Ukraine war continues. Although there are planned talks on containing the war, the first round failed to achieve consensus between the two states and war has continued in Ukraine. The ICC has also begun an active probe into the war crimes committed against Ukraine. “I have notified the ICC Presidency a few moments ago of my decision to immediately proceed with active investigations in the Situation. Our work in the collection of evidence has now commenced,” the ICC Prosecutor, Karim Khan, said in a statement acknowledging receipt of referrals from 39 ICC state parties regarding the matter. Will this be enough to make Russia back off?
As the inflationary pressure continues, the mortgage rates are expected to rise too having been on a rising streak since January. In February, the fixed rate mortgage rates closed at 3.89%, 3.14% and 2.98% for the 30-yr, 15-yr and 5-yr mortgages respectively. The war in Ukraine continues to add more strain on the purchasing power as the price of the affected commodities such as gas and wheat expected to continue rising. This will push the cost of building higher despite the already supply constraint for houses in the US. According to Realtor.com, there was a 5.24 million homes supply gap in 2020, a situation that has worsened following the Covid-19 impact. The demand push on the housing prices coupled with the rising inflation will push the cost of mortgages higher unless the Fed intervenes through monetary policies pegged on mortgage-backed securities.
Wednesday Stock Highlights
