Dow Jones declines amid concerns about US economy

Economies.com
2023-05-25 14:40PM UTC

US stock indices were mixed on Thursday amid ongoing uncertainty about the US debt ceiling crisis. 

 

Fed's Minutes

 

The Federal Reserve's meeting minutes showed division between officials on the need for further increases to interest rates, with some members expressing the need to, and others calling for a tapering off.

 

The Federal Reserve decided earlier this month to raise interest rates by 25 basis points, but the minutes shed light on the divisions about the next stop, with the overall tone pointing to a pause in policy tightening.

 

At the last meeting, Federal Open Market Committee officials decided to remove a major passage off the manifest, which pointed to the need to maintain current monetary policies.

 

The Fed is now depending more on fresh data to decide the next move.

 

Overall, members expressed uncertainty on whether upcoming policy tightening is useful, with the discussions ending with two potential scenarios:

 

The first was the view of some members that inflation reduction has been unacceptably slow, and thus there's a need for more rate hikes.

 

The second was the view of some members who pointed to a slowdown in growth, which necessitates a pause to policy tightening.

 

Debt Ceiling 

 

White House and Congressional officials continue to hold meetings to further negotiate after the failure of the previous talks to reach a compromise on raising the debt ceiling.

 

US President Joe Biden will extend talks with Congressional leaders later this week in a race to a catastrophic default on debt next week.

 

Many sticking points remain between both sides, with US Treasury Secretary Janet Yellen reiterating warnings from a potential default on payments next June, which would threaten the credit rating for the US and tip the economy into recession.

 

In a sign of danger, Fitch Ratings said the US credit rating is under negative review, which might lead to a downgrade. 

 

Otherwise, recent US data showed unemployment claims rose to 229 thousand last week from 225 thousand, while analysts expected 249 thousand. 

 

US GDP grew 1.3% in the first quarter, beating estimates of 1.1%.

 

On trading, Dow Jones fell 0.3%, or 92 points to 32,707 as of 15:38 GMT, while S&P 500 rose 0.5%, or 21 points to 4,136, as NASDAQ rose 1.2%, or 151 points to 12,635. 

American Markets News

Americas News

Markets

US stock indices gain ground after hefty losses yesterday
2024-05-24 14:57PM UTC
US stock indices rose on Friday amid attempts to recoup some of the hefty losses sustained ...
Americas News

Markets

NASDAQ continues to mark record highs
2024-05-23 16:49PM UTC
Most US stock indices rose today as markets process the Federal Reserve’s meeting minutes in ...
Americas News

Markets

Wall Street moves in a tight range of trading
2024-05-22 15:33PM UTC
US stock indices were mixed on Wednesday but still moved within a tight range of trading ahead of ...