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Market Turmoil Resumes As Inflation Rises More Than Expected, Oil Prices Spike, Gold At Record Highs: This Week In The Markets


Benzinga – by Piero Cingari, Benzinga Staff Writer.

Volatility stormed back into the markets, shaking things up in a week where inflation defiantly outstripped estimates for the third straight month in March, leading investors to substantially slash their expectations for Federal Reserve interest rate cuts.

Geopolitical tensions in the Middle East fueled a surge in commodities like oil and gold. Meanwhile, the start of the earnings season saw major banks slightly surpassing estimates, yet the overall negative sentiment has still triggered a negative response from stocks.

On Friday, the CBOE Volatility Index, or VIX, spiked the most in more than a year, amid rising indications of an imminent Iranian attack on Israeli soil, with President Joe Biden acknowledging it could occur “sooner rather than later.”

Rate Cut Expectations Delayed
Following recent hotter-than-expected inflation data, the likelihood of a June rate cut plummeted from 60% to 20%. Some Wall Street analysts now expect only one rate cut in December.

Mortgage Rates Surge
U.S. mortgage rates are on the rise, with the 30-year fixed rate hitting 6.88%, as recent inflationary pressures raised long-term Treasury yields and weakened expectations for Federal Reserve rate cuts. This surge raises affordability concerns for homebuyers, exacerbating the housing market’s challenges with high prices and low inventory.

Consumer Sentiment Drops
The sentiment among U.S. consumers fell in April, missing economist forecasts, per the University of Michigan. The report underscored the increased economic anxiety that comes with rising inflation expectations.

Confidence In Musk Fades
Wall Street’s confidence in Tesla Inc. (NASDAQ:TSLA) CEO Elon Musk is declining, as highlighted by CNBC’s Jim Cramer. Amid a substantial drop in Tesla’s stock driven by vehicle price cuts and strong competition, Musk faces skepticism about his focus due to his other ventures. In contrast, Warren Buffett‘s Berkshire Hathaway Inc. (NYSE:BKR)(NYSE:BKR) garners praise for its robust long-term performance.

Ark Bets On OpenAI
Cathie Woods Ark Invest took a stake in OpenAI through its Ark Venture Fund, seeking to capitalize on the growing interest in artificial intelligence technologies. This investment allows Ark’s clients to gain exposure to OpenAI, along with other high-profile companies such as SpaceX and X Holdings.

AI Power Fears
By 2030, artificial intelligence technologies could account for up to 25% of U.S. energy consumption, according to Arm Holdings plc (NASDAQ:ARM) CEO Rene Haas. This projection emphasized the significant increase in electricity demand driven by artificial intelligence data centers needed for sophisticated AI models like ChatGPT.

Photo: Shutterstock

© 2024 Benzinga does not provide investment advice. All rights reserved.

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