Sunday, August 14

Dow Jones on alert: analysts predict more volatility, pending inflation

DOW JONES Ind Average tries to put order between its value and between investors who have received like a jug of cold water the arrival of Ómicron that turns some markets upside down worried about the uncertainty of the level of recovery, the rise in raw materials, the withdrawal of stimulus from the Fed, bottlenecks and the resulting shortages in the supply chain and above all because of inflation.

That will precisely be the watchword of this week when on Friday we learn on Wall Street the evolution of consumer prices for the last month, November. It will be the determining factor in the American market which expects a rise in the monthly CPI by 0.6% and the year-on-year by 6.7%. A slowdown of three tenths compared to the October figure and a half-point advance in year-on-year figures, which already accounted for last month, the biggest advance in 30 years for inflation.

And is that all these movements keep the Dow Jones in yo-yo mode with great volatility since the Omicron variant was unleashed, which without presenting serious cases or deaths at the moment, returns us to the perspective of greater restrictions, a setback that can be seen in the effect of the recovery and inflation.

Dow Jones evolution in points since the arrival of the omicron variant

A week to wait for the Dow Jones expectantly staring at the Fed that next week, on the 14th and 15th, it celebrates its final meeting of the year lasting two days and in which lThe details of the tapering after President Powell’s change in bias on inflation, which he no longer sees as transitory, compared to his previous statements.

Large demonstrations are not expected this week, as usual in the pre-monthly meeting. We will only hear from Neel Kashkari the president of the Minneapolis Fed next Thursday.

It should also be noted that, due to the prevailing concern, the employment data, very low, have passed without pain or glory, with the creation of 210,000 new jobs – compared to the expected 537,000 and the drop in the unemployment rate to 4.2% – that analysts do not believe it can change the expected acceleration of tapering by the Federal Reserve in the face of increasing inflation.

A waiting measure that for Dow Jones has been settled this week with drops of 0.91% in the last five sessions, 4.8% in the month, and a 2.23% cut recorded by the traditional Wall Street indicator in the preceding three months. So far this year it maintains a positive trend with advances of 13%, which, since December 2020, have already reached 14.43%.

Dow Jones annual evolution of its price

How do you know tapering will continue to be the great topic of discussion in the markets, following the purchase of FED bonds in early 2020 to support the economy due to the pandemic crisis. In the announcement of the November meeting the 15 billion slowdown was put on the table per month, cat the end of the program in June 2022, But after Powell’s statements and with the “hot” inflation figure, the process of withdrawing the stimulus and therefore raising interest rates earlier than expected may accelerate.

This is exactly what it masters, along with the news from Omicron Wall Street on top of business news, and will continue to do so, at least that’s what the pundits are hoping for, in the days ahead.

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