It’s starting to break bad – U.S. stocks suffer big weekly losses amid global uncertainties

Greetings,

All hell is starting to break loose in the markets. America knows that she is in trouble. She knows that this thing will eventually break bad. There is much fear and loathing in the land of “Exceptional Stan”.

The markets are screaming economic collapse. It is actually underway and the fed and all of their economic magicians can’t keep up the illusion that the economy is rebounding.

     U.S. stocks suffer big weekly losses amid global uncertainties

U.S. stocks slumped in the week, as investors assessed the U.S. Federal Reserve’s decision to leave interest rates unchanged and the possibility of a Brexit as well as the Bank of Japan’s (BOJ) policy meeting.

After falling four times in the past five sessions, all three major indices suffered big weekly losses, with the Dow, the S&P 500 and the Nasdaq tumbling 1.1 percent, 1.2 percent and 1.9 percent, respectively.

The Federal Reserve’s policy meeting was the spotlight of the week. After the conclusion of a two-day meeting, the U.S. central bank decided to keep its federal fund rate unchanged.

According to the statement released after the meeting, the Fed continued to lean toward hiking rates. However, the Fed’s “dot plot,” which contains the interest rate forecasts of Fed officials, shows that six members now believe there will be just one rate hike this year, up from one member in March.

“Caution is all the more appropriate, given that short term interest rates are still near zero, which means that monetary policy can more effectively respond to surprisingly strong inflation pressures in the future than to a wakening labor market and falling inflation,” Fed Chair Janet Yellen said in a press conference Wednesday.

“A confused and uncertain Fed is more likely to do nothing than something, which helps explain why the list of excuses not to hike seems to grow at each meeting. It’s also reason to think the Fed will continue to hesitate until core inflation finally takes off, if it ever does,” said the FTN Financial in its weekly report Friday.

Fears of a Brexit also weighed on market sentiment. Analysts note that the potential for a Brexit has caused volatility in the markets.

The Bank of England warned Thursday of an adverse spill over to the global economy if Britain votes in a week’s time to quit the European Union.

“Brexit would be the worst-case scenario for stocks and companies with EU/UK exposure since a Brexit could lead to contagion fears and slowing growth — neither is generally good for stock performance or earnings,” the U.S. investment bank Keefe, Bruyette & Woods said Friday.

A referendum will be held on Thursday, 23 June, to decide whether Britain should leave or remain in the European Union.

In Asia, the BOJ on Thursday opted to leave its monetary policy unchanged and maintained its view that the economy is recovering moderately despite the yen’s recent appreciation and concerns over possible Brexit.

On the economic front, advance estimates of U.S. retail and food sales in May increased 0.5 percent from the previous month to 455.6 billion U.S. dollars.

The Producer Price Index (PPI) for final demand increased 0.4 percent in May, seasonally adjusted.

U.S. industrial production decreased 0.4 percent in May after increasing 0.6 percent in April.

The Consumer Price Index for all urban consumers increased 0.2 percent in May on a seasonally adjusted basis, and the index for all items less food and energy also rose 0.2 percent.

In the week ending June 11, the advance figure for seasonally adjusted initial claims was 277,000, an increase of 13,000 from the previous week’s unrevised level.

U.S. privately-owned housing starts in May were at a seasonally adjusted annual rate of 1.164 million units, 0.3 percent below the revised April estimates.

Source: Xinhua

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