By John Meyer, financial consultant. Eurasia Business News, January 25, 2022
Dow Jones Stock Exchange, Manhattan, New York City – Photo credit : Swann Collins.
The New York Stock Exchange closed lower on Tuesday, weighed down mainly by the decline in major technology stocks amid uncertainty over the decisions of the U.S. Federal Reserve (Fed) expected this week and growing geopolitical tensions in Europe and Asia.
The Dow Jones index fell 0.19%, or 66.77 points, to 34,297.73 points.
The broader S&P-500 lost 53.68 points, or 1.22%, to 4,356.45 points.
The Nasdaq Composite fell for its part by 315.83 points (2.28%) to 13,539.30 points.
Like the day before, the main Wall Street indexes experienced a choppy market, alternating between sharp declines and slight gains. The S&P-500 has once again flirted with the correction zone – down 10% or more from its January 3 closing high.
The U.S. Fed began its two-day monetary policy meeting on Tuesday, at the end of which it will publish a statement eagerly awaited by investors and lenders, eager to know precisely the roadmap of the U.S. central bank about the rise in key interest rates to fight high inflation.
The U.S. inflation surged to 7% over 2021, a record since June 1982, after hitting 6.8% in November.
On the sidelines of the soaring energy and consumer prices, geopolitical tensions in Europe and Asia are adding to the uncertainties. NATO has sent troops to its eastern flank in Europe and the United States has put thousands of soldiers on alert in the event of an armed clash between Ukrainian and Russian forces. The dialogue has deteriorated between the Ukrainian government and the Russian separatists of Eastern Ukraine. Russia fears an armed operation against Russian civilians in Donbass region and warned of strong Russian reaction in case of attack. In this landscape, the U.S. sees the situation as a Russian threat over Ukraine. Moscow has been gathering thousands of troops near the Ukrainian borders. The Kremlin accuses Ukraine and the U.S. of calling for hosting NATO troops and weaponry on the Ukrainian territory. The Russian government sees NATO troops on its borders as a direct threat.
These geopolitical tensions in Europe about Ukraine also fuel U.S. worries about the island of Taiwan, in Eastern Asia. Communist China has been planning and preparing for decades an attack against the democratic island. Taiwan, which has 23 million inhabitants, is considered by communist China as a rebel province. The United States, which diplomatically recognizes Beijing since 1979, has maintained relations with Taipei and remains its most important military support. China claims Taiwan as part of its territory and threatens to attack if Taipei declares independence.
Geopolitics are raising fears of an oil supply crunch in 2022 and are fueling higher crude prices. This helped gains on Tuesday in the energy sector which saw the biggest rise among the major S&P-500 sectors.
As a result of high inflation over 2021, the crypto crash since December and low stock markets, gold prices have strongly increased over the past weeks, as the yellow metal is usually seen as a great hedge against inflation and turbulences of financial markets. Gold reached $ 1,848 per troy ounce on January 25.
Read more about gold, inflation and monetary imbalances with Gold : Build Your Wealth and Freedom
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