U.S. stocks rose on Wednesday, trying to escape a third straight week of losses as interest rates and oil prices fell, easing investor concerns about rising inflation. .
At the end of the session, the Dow Jones index rose 435 points (equivalent to 1.4%) to 31,581 points. The S&P 500 index advanced 1,83% to 3,979 points. The Nasdaq Composite added 2.14% to 11,791 points, ending a streak of seven consecutive losses.
Yields on US government bonds fell after rising on Tuesday (September 6). The British Pound (GBP) hit its lowest level against the dollar since 1985.
US stocks rallied as Federal Reserve Vice Chairman Lael Brainard reaffirmed that the central bank will act as necessary to rein in inflation, while noting risks of going too far . Many investors decided to focus on this latter point from Ms. Brainard's speech.
US stocks reversed from earlier declines in futures trading. Futures contracts fell after the Wall Street Journal reported that Fed Chairman Jerome Powell's pledge to reduce inflation could mean the central bank raises interest rates by 0.75 percentage points in September. 2022, this will be the 3rd rate hike in a row of that size.
Markets had hoped that the Fed would initiate smaller rate hikes in September, but at one point they valued the 86%'s ability to raise rates by 0.75 percentage points.
On Wednesday, the Fed released a summary of current economic conditions, called the Beige Book. The report showed economic activity mostly flat in many regions across the US, and growth prospects remained weak.
US stocks recently struggled when US government bond yields knife hovering around the highest level since June 2022. On top of that, September has historically been the toughest month for the market. All eyes are on the S&P 500's 3,900 point. Some see the index even falling below that mark, while others are optimistic about a year-end rally.
Oil prices fell more than $4 on Wednesday to their lowest levels since the Russia-Ukraine conflict, as demand concerns fueled by recession risks and dismal China trade forecasts. Ending the session, the Brent oil contract fell 5.2% to $88/barrel. WTI oil contract lost 5,69% to 81.9 USD/barrel.
Gold prices recovered on the same day as the dollar eased slightly from two-decade highs, as bargain hunters capitalized on recent declines in gold prices, however, the precious metal's outlook remained dim. by the possibility of drastic interest rate hikes.
At the end of the session, the spot gold contract advanced 0.9% to 1,716 USD/oz. Gold futures added 0.9% to $1,727 an ounce.
The ICE US Dollar Index - a measure of the dollar's performance against six other major currencies - hits a 20-year high, making gold less attractive to foreign buyers .
DXY has set a new twenty-year high of 110.78, accompanied by deeper declines in the Euro and Yen, continuing a bad trend from recent months.
Bitcoin and altcoins
Data from TradingView recorded rapid losses for BTC on September 6, with an overnight low of $18,540, marking the lowest since June 30, taking liquidity from the July floor and recovering only slightly during the day.
The bearish price action followed nearly a week of sideways volatility and no volatility at all as market participants gritted their teeth waiting for a bullish exit.
In this case, they were very disappointed, but for trader Il Capo of Crypto, there is still reason to believe that a slight rally will occur.
“First of all, the price is currently above the key daily support (range low 18,500–19,000). That's where the last bear market rally started, showing strong demand here. A bounce from here to the supply zone (22,500–23,000) would make a perfect H&S.”
$BTCSeptember 7, 2022
First of all, price is right now sitting above major daily support (range low, 18500-19000). It's where the last bear market rally started, indicating there's strong demand here. A bounce from here to the supply zone (22500-23000) would form a perfect H&S. https://t.co/kFxIg0gnLW pic.twitter.com/J2o1uCzkxt
The analyst added that each breakdown is accompanied by weakening volume, indicating that sellers are working more and more to fight the bearish tide.
“OI also indicates that Shorts are stuck and there is a lot of fuel for a Short squeeze.”
For this to not happen, consolidation will need to start below late-June levels near $ 18,500.
“Summary: still a possibility of a Short squeeze to 22,500–23,000. Most people are optimistic, but the charts show the opposite. Don't be confident with your Short positions. I still mostly use USDT but hedge against this potential move. Time will answer."
With Bitcoin's slight increase of 2% at press time, altcoin in the top 100 are also turning green, with the lead of HNT while increasing 48%. Followed by a number altcoin typical like EOS (+18%), CRV (+10%) while ATOM, COMP, YFI, QNT, ETC are all gaining 8% on the day.
Investor sentiment remains steeped in fear with the greed and fear index at 20 at press time.