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Roundup: U.S. equities post weekly losses amid rate hike concerns, economic data

Jan 16, 2022

New York (US), January 16: U.S. stocks declined for the week, pressured by growing expectations on rate hikes and a slew of lackluster economic data.For the week ending Friday, the Dow dipped 0.88 percent, the S&P 500 fell 0.3 percent and the tech-heavy Nasdaq slid 0.28 percent.The Nasdaq has dropped for three straight weeks, while the S&P 500 and Dow each booked two consecutive weeks of losses, according to Dow Jones Market Data.The S&P U.S. Listed China 50 index, which is designed to track the performance of the 50 largest Chinese companies listed on U.S. exchanges by total market cap, logged a weekly gain of 2.37 percent.U.S. Federal Reserve officials signaled this week that the central bank could start raising interest rates in March as U.S. annual inflation surged to an almost 40-year high in December.In testimony given to Congress this week as part of his confirmation hearing for a second term, Federal Reserve Chairman Jerome Powell referred to inflation as a "severe threat" to the economic rebound, compared to the "transitory" designation that existed just three months ago.Powell said the Fed is preparing to raise interest rates and that the economy no longer needed extraordinary accommodation, signaling that the central bank may also begin to trim its balance sheet soon after it commences rate increases.Loretta Mester, president of the Federal Reserve Bank of Cleveland, believed that it's "a compelling case" for the central bank to raise the federal funds rate from the current record-low level of near zero at its March 15-16 meeting.The Fed is on track to conclude its asset purchase program in mid-March as it exits from the ultra-loose monetary policy enacted at the start of the pandemic.Fed officials' median interest rate projections released mid-December showed that the central bank could raise rates three times this year, up from just one rate hike projected in September.Economists at Goldman Sachs said recently in a note that they expected the Fed to raise rates four times this year, one more than previously forecast, due to persistently high inflation combined with a labor market near full employment.The U.S. consumer price index (CPI) last month rose 0.5 percent from the previous month and 7.0 percent from a year earlier, the largest 12-month increase since June 1982, the Labor Department reported on Wednesday.The so-called core CPI, which excludes food and energy, rose 0.6 percent for a 5.5 percent year-on-year increase, the report showed.Mark Haefele, chief investment officer at UBS Global Wealth Management, said the data release supported the Fed's recent shift toward a faster pace of monetary tightening."The overriding message of the December CPI is that inflation is no worse than expected, but expectations shifted in recent months to expect it to continue getting worse for a time before it gets better," said Will Compernolle, senior economist at FHN Financial, adding "the report will keep the Fed on its path to finish tapering in March and start hiking rates this year."Meanwhile, a batch of weaker economic data this week cast some doubt on the steam of the economic recovery from the COVID-19 pandemic.The U.S. Labor Department said on Thursday that the nation's initial jobless claims, a rough way to measure layoffs, rose by 23,000 to 230,000 in the week ending Jan. 8. Economists polled by The Wall Street Journal had estimated new claims would slip to 200,000.U.S. retail sales in December dropped by 1.9 percent from the previous month, marking the largest monthly decline since February, the Commerce Department reported Friday. Economists polled by The Wall Street Journal had forecast a 0.1-percent decline in December retail sales.Source: Xinhua