The previous week began with the significant growth in anticipation of comments by Fed Chairman Jerome Powell regarding his views on raising interest rates.

According to the Ministry of Commerce, the sales of new single-family homes in the US fell for the second consecutive month in January, which was caused by sharp contraction in the Northeast and South of the country. Sales of new buildings fell by 7.8%, seasonally adjusted to the adjusted level of 593,000 units, the lowest level since August 2017. The sales pace in December was revised to 643,000 units from previously registered 625,000.

The next day, the US stock market experienced general decline of more than 1%. The main reason was the increase in the income of US bonds after Powell's announcement about stronger economy and the growth potential for inflation. In a prepared appeal to Congress, he said that the rate increase should continue, despite the additional stimulus from tax cuts and public spending growth. Powell spoke positively about the US economy, pointing out that it is growing at a significant pace.

On Wednesday, the decline in indices continued, as investors continued to assess the likely consequences of the Fed's interest rate hikes. Market participants expressed fears that the Fed will start raising rates at a faster pace. In addition, the pressure on the markets was due to significant drop in shares of the base materials sector and the conglomerate sector. In addition, according to the published data, economic growth in the US slowed slightly more than originally expected in the fourth quarter, as the fastest consumer spending for three years supported imports and inventories. In the last three months of 2017, gross domestic product increased by 2.5% year-on-year, rather than the previously estimated rate of 2.6%, the Ministry of Commerce reported in its second assessment.

On Thursday, Trump's statements on the introduction of tariffs of 25% on steel and 10% on aluminum from the next week were the main reason for the continuation of the fall of the American stock market.

On Friday, the major US stock indexes ended the traiding mixed. The Dow industrial index declined amid fears of a global trade war after President Donald Trump's promise to introduce import tariffs for steel and aluminum. The pressure on the index also affected the fall of McDonald's Corporation shares after lowering the target value of its shares. At the same time, the indices of Nasdaq and S & P 500 grew moderately, partly due to the positive data on the US. The final results of the studies, submitted by Thomson-Reuters and the Michigan Institute, showed that in February US consumers felt more optimistic about the economy than in January. The consumer sentiment index rose to 99.7 points compared with the final reading for January 95.7 points and the preliminary value for February 99.9 points. It was expected that the index will be 99.5 points.

 

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