The Weekly Wall Street Wrap Up 6/19/2021

This is Vance from highfinancethoughts.com with the Weekly Wall Street Wrap Up. I’m going to update you on the most important news stories that happened this past week in the world of finance.

To start things off, the stock market experienced a tough end to the week and closed significantly down on Friday. The Dow Industrial Average was down for 5 straight days. The Dow was down 3.4% this past week. This was the worst week for the Dow since October 2020. The S&P 500 had its worst week since February, falling 1.9%. The decline in the stock market was in response to the news conference held by Federal Reserve Chairman Jerome Powell.

The Federal Reserve had a meeting to go over inflation concerns and their plans on how to mitigate its impact. Chairman Powell discussed how the Fed’s new inflation expectations are higher than they were previously. The Federal Reserve raised its headline inflation expectation to 3.4%, which is a full percentage point higher than the projection from March of 2.4%. This new expectation is thought to be more realistic than their previous projection.

Everyone’s main concern was regarding interest rates and if and when they will start to go up. This is important to know because generally when interest rates rise, stock prices fall. Chairman Powell said interest rates will stay around zero for now but increases are likely to come sooner than expected. Back in March the Fed said they weren’t planning on raising interest rates until 2024. But officials are now saying they expect to have two rate hikes in 2023.

Another big topic Chairman Powell discussed was that the Fed will not cut back on its current aggressive bond-buying program. But Powell did mention this issue was discussed at their meeting. I personally think this means the current rate that the Fed is buying bonds will decline by 2022. The overall message from the meeting seemed to be that nothing is changing now, but changes will be coming sooner than expected.

I personally think the stock market is going to experience some major downward trends in the near future. Stocks have had some incredible gains over the past 6 months and I think a lot of stocks have probably become overvalued and the market is going to be doing some price corrections with news on rising interest rates being the catalyst that drives the stock market down. I have personally started selling some of my tech stocks, like Snowflake (SNOW), Lemonade (LMND), and DoorDash (DASH), that have experienced some good growth over the past few months. I originally wanted to hold on to these and watch them grow but I worry that growth tech stocks will be some of the hardest hit if and when the stock market starts to crash. So I figured it was best to exit my position on those now and take my profit while I could.

In cryptocurrency news, Bitcoin and the crypto markets are down this week. Bitcoin is down about 1% over the past 7 days. Bitcoin and the crypto market had decent gains coming out of last weekend but then have been on a downward trend over the last few days. This may be in response to the latest crackdown on crypto coming out of China. The Chinese providence of Sichuan issued an order to crack down on crypto mining operations. Sichuan is now the fifth Chinese providence to announce crackdowns or partial bans on the crypto mining industry.

You are now caught up on all the latest finance and investing news. Follow me on Twitter @VanceAlm where I tweet about investing and finance every weekday. Don’t forget to like and share this video. Keep investing wisely!

Photo by Rafael Saldaña from flickr

The Fed’s Stance On Inflation, Interest Rates, And What It Means For You

Everyone has been waiting to hear the Federal Reserve’s thoughts regarding inflation and their plans to counter it. The biggest question on everyone’s mind was whether or not the Fed is planning on raising interest rates. On Wednesday, 6/16/21, Federal Reserve Chairman Jerome Powell made a very important announcement regarding the central bank’s thoughts regarding inflation and how they will address it.

Many people feel that the Fed has been downplaying inflation and the affects it is having on the economy. Today was a little different because Chairman Powell discussed how the Fed’s new inflation expectations are higher than they previously were. The Federal Reserve raised its headline inflation expectation to 3.4%, which is a full percentage point higher than the projection from March. This new expectation is thought to be more realistic than their previous projection.

The biggest news from Chairman Powel was that the Federal Open Market Committee will keep benchmark short-term borrowing interest rates near zero percent. This is important to know because generally when interest rates rise, stock prices fall. Interest rates obviously can’t stay near zero forever and officials indicated that rate hikes could come as soon as 2023, which is a year soon than the Fed’s previous statement in March that it saw no increases until at least 2024. Powell also said the Fed will not cut back on its aggressive bond-buying program but did mention this issue was discussed at their meeting.

Powell mentioned many positive trends in the economy that the Fed has been tracking. Household spending is up. Average pay is up. Unemployment is down to 5.8%. Unemployment is expected to be down to 4.5% by the end of this year, and down to 3.5% at the end of 2023. Powell also noted that excessive spending from the excitement of reopening the country is helping to drive up consumer prices, which adds to inflation concerns but this extra consumer spending is expected to come down in the near future.

Fed Chairman Powell reiterated the fact that the central bank will do everything they can to help the economy recover from the impacts of the pandemic. He also reaffirmed that interest rates will not rise until certain goals are met regarding unemployment, inflation, and other factors. Powell discussed how the increased inflation currently being experienced by the market is temporary and the long-term goal is still 2%.

That was all the highlights from today’s news conference from Federal Reserve Chairman Jerome Powell. I think it was nice to see the Fed raise their inflation expectation because it’s more realistic to what we are seeing in the markets, especially with the prices of real estate, commodities, and raw materials being so high. What are your thoughts about today’s announcements from the Fed? Leave me a comment and let’s have a conversation. Don’t forget to follow my Twitter @vancealm where I post about investing and finances every weekday. Invest wisely!

Photo by Alex Bierwagen on Unsplash