US stock markets have dropped significantly

Investors are anxiously awaiting the announcement of the new interest rate by the US central bank (Fed) next week. A jittery market opened lower on Monday and three major US stock indexes were set to fall 1.5 to 2.1% two hours before the end of the trading day. They also stayed there for the rest of the day, and finally finished:

  • With a drop of 1.79 percent for the S&P 500.
  • The Dow Jones fell 1.40%.
  • The Nasdaq Composite fell 1.93%.

Tesla shares crash

Shares of Tesla fell five percent as the exchange opened Monday afternoon, following rumors that the company is cutting production at its Shanghai plant. Though a company rep tried to dismiss the rumors Reutersthe share fell by 6.4%.

The US ISM index, which measures the expectations of US purchasing managers, was released on Monday afternoon, Norwegian time, for sectors other than industry.

The US Purchasing Managers Expectations Index (ISM) for the services sector was 56.5% in November, compared to 54.4% the previous month. In advance, according to Trading Economics, an index of 53.3% was expected.

November’s high reading creates more unease for investors, who now fear the Fed will continue with more aggressive rate hikes, writes CNBC.

US November industrial order also closed higher-than-expected month-on-month in October, up 0.8%, according to data from US statistics authorities. Upfront, industrial orders were expected to rise 0.7%, according to consensus forecasts from Trading Economics.

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The University of Michigan’s monthly Consumer Confidence Survey for November will be released later this week. Consumer confidence provides an indicator of household inflation expectations.

In Handelsbanken’s morning report on Monday, economists wrote that it is inflation expectations among households that should be taken into consideration.

– It is especially long-term expectations that are being emphasized by the Fed, and here we have recently seen renewed upside. The worst price pressure may therefore be behind us, but at the same time there is the prospect that inflation will remain well above target for a long time to come, Handelsbanken economists write in their morning report.

Waiting for the last interest rate determination of the year

There are just nine days left until central bank Governor Jerome Powell and the Federal Reserve deliver the last interest rate announcement of the year on Dec. 14.

There the central bank is expected to lower the rate a bit, after four consecutive hikes of 0.75 percentage point, and there the latest increase took place in early November. Indeed, Powell said last week that the time for “moderation in interest rate setting” may be imminent.

On Thursday of last week, PCE data, the Fed’s favorite measure of inflation, proved it US inflation was six percent in October. But the day before the Fed’s next interest rate decision, another figure for US inflation will be released.

Ahead of the Fed’s latest interest rate announcement of the year, the key interest rate is between 3.75 and 4%.(Terms)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using the links, which lead directly to our pages. Copying or other forms of use of all or part of the content may only take place with written permission or as permitted by law. For additional terms see her.

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