Wall Street fell last week, European markets rose

On Wall Street, stock prices fell last week as it became increasingly clear that the interest rates of the U.S. Fed would reach higher levels than the market had anticipated, while European markets rose.

On Wall Street, the Dow Jones weakened by 0.1 percent to 33,826 points, and the S&P 500 fell by 0.3 percent to 4,079 points. The Nasdaq index, on the other hand, strengthened by 0.6 percent to 11,787 points.

Trading on the world’s largest stock exchange was uncertain last week as all new data showed that inflationary pressures in the U.S. are not easing as quickly as investors had hoped.

Inflationary pressures could remain elevated for a longer period

On the other hand, market support comes from data indicating that the world’s largest economy could avoid recession.

Last week, it was reported that consumption in January rose more than expected.

It was also reported that the number of initial claims for unemployment benefits unexpectedly fell last week, indicating that the labor market remains strong.

Additionally, it was reported that producer prices in the U.S. rose by 0.7 percent on a monthly basis in January, marking their largest increase in the last seven months and significantly above analysts’ expectations of 0.4 percent.

All this data suggests that inflationary pressures could remain elevated for a longer period than the market had anticipated.

As a result, it is now estimated that the U.S. central bank will raise interest rates at least two, and possibly three more times, which could reach 5.3 percent by July.

– After this data, it is clear that the Fed will continue to raise rates, and speculation has begun that at the next meeting, rates could be increased by 0.50 percentage points – says Tim Ghriskey, a strategist at Ingalls & Snyder.

Since the beginning of the year, stock prices have risen sharply as investors hoped that the Fed could end the rate hike cycle with the key rate below 5 percent and that by the end of this year, when inflation eases, it could begin a rate-cutting cycle.

However, all recent data indicates that the Fed will most likely raise rates above 5 percent and keep them at those levels until next year.

The president of the St. Louis Fed, James Bullard, hinted that a change in the direction of Fed monetary policy is still far off, stating that he sees more aggressive moves from the Fed in the future.

– I advocated for a 0.5 percentage point increase in interest rates at the last Fed meeting and stated that we should reach the level of rates we consider sufficiently restrictive as soon as possible – Bullard said.

The president of the Cleveland Fed, Loretta Mester, also stated that she advocated for a larger increase in interest rates than the agreed 0.25 percent at the last Fed meeting.

Company earnings results boosted European markets

On European markets, stock prices rose last week, mainly due to better-than-expected quarterly earnings results from companies.

The London FTSE index strengthened by 1.5 percent to 8,004 points, while the Frankfurt DAX rose by 1.1 percent to 15,482 points, and the Paris CAC increased by 3 percent to 7,347 points. During the week, the FTSE and CAC reached their highest levels in history.