Stocks Retreat As Fed Expects Two Rate Hikes In 2023

S&P 500 futures are moving lower in premarket trading as stocks remain under pressure after Fed Interest Rate Decision.

The Fed left the interest rate unchanged, but Fed’s dot plot, which shows the potential trajectory of interest rates in the future, indicated that two interest rate hikes are expected by the end of 2023.

Fed reacted to the recent inflation data from around the world, which indicated that higher commodity prices and various production bottlenecks have already had material impact on prices, in addition to the inflationary pressure created by money-printing from central banks.

U.S. dollar was the main beneficiary of Fed’s hawkish tone. The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, moved from 90.50 to 91.80 in less than one day.

Gold Declines Below $1800
Strong dollar and higher Treasury yields put significant pressure on gold, which has recently managed to settle below the $1800 level and is currently trying to get below $1775. Silver is also under pressure. Currently, it is trying to settle below the support level at $26.30.

Gold price dynamics will certainly put significant pressure on gold mining stocks at the beginning of today’s trading session. Silver mining stocks will also move lower. Meanwhile, traders should continue to monitor the developments in U.S. government bond markets. If yields pull back from recent highs, gold and silver may get some support.

Initial Jobless Claims Increased To 412,000
The U.S. has just released Initial Jobless Claims and Continuing Jobless Claims reports.

Initial Jobless Claims report indicated that 412,000 Americans filed for unemployment benefits in a week compared to analyst consensus of 359,000. Continuing Jobless Claims remained flat at 3.52 million (the previous report was revised from 3.5 million to 3.52 million).

Interestingly, these reports may provide some support to the market as disappointing job market data is bullish in the current market environment as Fed promised to support markets until its employment targets are met.

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