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The S&P 500 erased previous daily gains and dropped 0.12%, settling at 4,544.36, shortly after Fed’s Chair Jerome Powell had admitted that the central bank keeps monitoring price pressures carefully and would act as required.
Indices record losses between 0.23% and 0.98%, except for the Dow Jones Industrial, up 0.18%. The sectors of the $&P 500 which lose the most are the Communications followed by Construction, recording losses of 2.61% and 0.46%, respectively.
Winners, on Friday, are financial stocks up by 1.27% and real estate gaining 0.74%, which lie on the back of higher U. S. Treasury yields.
Jerome Powell said he is concerned about higher inflation and added that the central bank would monitor for signals that households and businesses are expecting sustained upward price pressures.
Powell added that the Fed is on track to begin tapering asset purchases, and if the economy evolves as Fed expected, it will be completed by the first half of 2022. He reiterated that although he favors the timing of the QE reduction, he added, “I don’t think it is time to raise rates”.
Economic Data
U.S. Composite Purchasing Managers’ Index; PMI Output Index, which tracks the manufacturing and services sectors, has rebounded to a reading of 57.3 in the first half of October from 55.0 in September. A reading above 50 indicates growth in the private sector.
The Baker Hughes report has shown the first decline in oil rigs in the last seven weeks. The amount of US rigs drilling for oil declined to 443 this week, from 445 on the previous one, while natural gas fell by one to 542, according to the report.
Other Developments
U. S. Manufacturers rapidly expanded activity, but ongoing labor shortages and supply bottlenecks acted as a downtrend drag on growth.
WTI futures have bounced up to $82.50. the U. S. crude oil regained previous losses to return to levels near multi year highs at $83.95.
Crude prices remain within previous ranges, consolidating after a nine week surge, however, oil prices retreated earlier today as the German Chancellor, Angela Merkel, and Federal Reserve’s Chairman, Jerome Powell, warned about demand disruptions if coronavirus infections are likely to reemerge.
The surge of coronavirus cases registered in China and Russia also raised concerns that the pandemic might not be over yet.
Most important news headlines on the U. S. session include the following:
WTI bounces up to highs near $84.00
Will fuel prices push Germany to nuclear power?
U.S. oil & gas rig weekly count falls to 542
Is housing still U. S. economy’s energizer?
Whole capacity for gas from Russia to Europe is used
Powell expects inflation to continue in 2022
Fed’s Powell: It’s time to start tapering, interest rate: not yet
