U.S. Stock Market

U.S. Stocks Set To Open Lower Amid Global Market Sell-Off

U.S. Federal Reserve Expects That U.S. Economy Will Shrink By 6.5% in 2020

S&P 500 futures are losing more than 2% in the premarket trading session as global markets are under pressure following Fed’s commentary about economic perspectives.

The Fed expects that U.S. GDP will fall by 6.5% in 2020 before rebounding by 5% in 2021, while the Unemployment Rate is expected to be at 9.3% at the end of this year.

Fed Chair Jerome Powell stated that the interest rate will stay near zero through 2022 while the Fed will continue asset purchases of at least $120 billion on a monthly basis.

This time, the markets focus on Fed’s economic forecast rather than on a promise of monetary stimulus. The stocks have reached high levels after the major rebound from mid-March lows so the market priced in a swift recovery.

The Fed’s economic outlook is a reminder that the situation in the real economy is challenging. It remains to be seen whether this outlook will lead to anything bigger than a temporary setback.

Gold Shines In The Sea Of Red

World indices are retreating everywhere from Europe to Asia as traders get out of riskier assets due to Fed’s grim outlook.

The only real bright spot is gold, which has managed to stay above $1700 per ounce during the recent market upside and has decent chances to get to new highs in case the global market sell-off continues.

The U.S. dollar is also gaining ground as traders turn their attention to safe haven assets, although gold’s position looks more promising as it has shown more strength before the current market sell-off.

Continuing Jobless Claims Stay High At 20.9 Million

The U.S. has just provided new Initial Jobless Claims and Continuing Jobless Claims reports.

Initial Jobless Claims report showed that 1.55 million Americans filed for unemployment benefits in a week, fully in line with analyst expectations.

Continuing Jobless Claims were 20.9 million compared to analyst consensus of 20 million. Continuing Jobless Claims data is alarming since the number of people who are getting unemployment benefits is still very high.

Also, the Continuing Jobless Claims report is somewhat surprising following the upbeat employment reports that were published last Friday.

For a look at all of today’s economic events, check out our economic calendar.