The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
Wall Street's major indexes saw a decline on Tuesday, driven by caution in the market ahead of Nvidia's highly anticipated earnings report and critical economic data expected later in the week. The S&P 500 and Nasdaq both dropped for the second consecutive day, with tech-related stocks bearing the brunt of the sell-off as investors shifted their focus towards upcoming catalysts.
Key Highlights:
Tech Sector Weakness: Tech stocks led the decline, with Nvidia shares down marginally ahead of its earnings report on Wednesday. Nvidia, which has been a key driver of the recent bull market rally, is expected to report a substantial increase in quarterly revenue. However, any slight miss in expectations could negatively impact its stock, adding to the caution in the market. Other semiconductor stocks like Broadcom and Micron also fell, contributing to a 0.5% drop in the Philadelphia Semiconductor Index.
Market Indices Performance: As of 9:54 AM ET, the Dow Jones Industrial Average was down 18.23 points (0.04%) at 41,222.29, the S&P 500 was down 4.72 points (0.08%) at 5,612.12, and the Nasdaq Composite was down 52.09 points (0.29%) at 17,673.67. The tech-heavy Nasdaq was particularly impacted by the pullback in tech stocks, while Amazon.com’s 1.4% decline also weighed on consumer discretionary shares.
Interest Rate Speculation: The market's attention is also focused on the potential for interest rate cuts, with traders now betting on either a 25-basis point or 50-basis point cut in September. The likelihood of a 25-bps cut is higher at 71.5%, according to CME Group's Fed Watch tool. This follows US Federal Reserve Chair Jerome Powell’s recent endorsement of an imminent start to rate cuts, which had previously fueled optimism in the market.
Economic Data and Recession Concerns: Investors are awaiting the release of July's personal consumption expenditure data on Friday, which is expected to be a significant market mover. Additionally, UBS Global Wealth Management has raised the odds of a US recession to 25% from 20%, citing revised job growth estimates and a softer July labor report.
Notable Stock Movements: Paramount Global dropped 5.8% after Edgar Bronfman Jr withdrew from the race to lead the company, paving the way for Skydance Media. Tesla extended its losses, falling 1.2% after Canada announced a 100% tariff on the import of Chinese electric vehicles, including those made by Tesla. Super Micro Computer also fell 4.8% after Hindenburg Research revealed a short position in the server maker.
In summary, Wall Street experienced a pullback as investors exercised caution ahead of Nvidia’s earnings and critical economic data, with tech stocks leading the decline. Market sentiment was further influenced by speculation around interest rate cuts and concerns over a potential US recession.
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