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Investing.com – U.S. stock markets opened significantly lower on Wednesday, reacting to comments, as well as just-released U.S. data.
The manufacturing PMI data issued by the Institute for Supply Management came out negative, contrary to expectations, adding to the confusion of the markets as the previous data.
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Federal Reserve statement a while ago
Fed member Neel Kashkari opened the door at the next Fed meeting to raise .
Kashkarali said that inflation is not driven by the labor market alone, but added that wage growth is now very high if compared to the target of falling inflation to 2% levels. Kashkari considered that the current job market is hot and rising strongly.
Kashkari considered that the most threatening thing is that raising interest rates to current levels (4.75%) did not succeed in reducing inflation in the services sector sufficiently.
Kashkari emphasized that the Fed wants to avoid an economic recession, but its most important priority goes to eliminating inflation and its decline.
Nik Kashkari said he would be ready to listen to suggestions for a 50 basis point rate hike at the next Fed meeting along with only 25 basis points.
He added that in December he saw that the Fed should reach interest rates to 5.4% levels and then keep them high, and now my opinion is to continue raising interest rates and tightening monetary policy compared to my opinion in December. He continued, “Of course I know that an extremist policy is a risk, but any other choice would be more harmful to the American economy than being too radical.”
Kashkari considered that the tightening policy produced by the Fed members is achieving the desired effect by curbing the US economy. Kashkari explained that everyone should slow down, “because if we announce the end of the battle with inflation early, it will be met with a backlash and loose dynamism from the markets, and then it will have to do more violent action than everything we are doing now.”
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Manufacturing PMI
(ISM) scored 47.7 points for the month of February, while it was expected to score 48 points.
While (ISM) scored 51.3 in February after it was destined to score 45.1 points.
The Industrial Support Management (ISM) index determines the activity level of purchasing managers in the industrial sector. A reading above 50 indicates expansion, and vice versa if it is below 50 points.
To get a reading of this indicator, purchasing managers determine the level of certain elements in the sector, including employment, production, new orders, resource allocation, and inventories. The bullish trend a positive impact on the country’s currency.
Currency traders closely monitor this index, as purchasing managers, due to the nature of their work, can access data about their companies’ performance, which makes this index a leading indicator of general economic performance.
Stock repurchase
Wall Street share buybacks look set to gain momentum in 2023, after rising more than 5% last year. And S & P Global data revealed that share buybacks in 2022 hit a record level of $930 billion, an increase of about 5.5% compared to 2021. As for dividends, they recorded $564 billion, an increase of 6.4%.
This trend appears to continue in 2023, with Occidental Petroleum announcing a 38% dividend increase to 0.18 per share from $0.13.
Meanwhile, Chevron (NYSE:) announced an increase in its annual share repurchase rate to $17.5 billion in the second quarter from previous levels of $15 billion.
This follows the company’s announcement last month that it will buy back $75 billion worth of shares over the next several years.
Howard Silverblatt of S&P Global expects that although 2023 data is not available (we are still in the first quarter of the year), but he indicated that share buybacks in the S&P500 could reach trillion-dollar levels.
$1 trillion share buybacks represent an increase of 7%, and would be the first time those levels have been recorded.
Wall Street now
The “industrial” index decreased by 0.15%, or 40 points, to record 32,617 thousand points.
The “S&P 500” also declined by 0.5%, or 22 points, to record 3948 points.
“Nasdaq” fell by 0.64%, equivalent to 70 points, at 11.384 thousand points.
Gold and the dollar now
The US dollar rose strongly during the current moments, at levels near $1835 an ounce, up by 0.45%.
On the other hand, futures contracts for the yellow metal rose during these moments of today’s trading, equivalent to 0.3%, to levels near $ 1843 an ounce.
While the American trimmed its losses in the current moments, the dollar index is now approaching the levels of 104.57, losing approximately 0.25%.
