Markets Right Now: Stocks plunge again, Dow sinks 464 points

Responding to tweets Federal Reserve chairman Jerome Powell

The US Federal Reserve raised the benchmark interest rate for the fourth time this year, eliciting a negative response from most global financial markets after the hike.

In particular, his speech that day noted that, even if the longstanding connection between very low unemployment and high inflation seems to have been broken, it would be unsafe for a central banker to ignore the risk that it could reemerge, and force a recession-inducing run-up in interest rates.

The move showed that the Fed sees the economy growing quickly enough to require a tap on the monetary brakes to keep it from overheating.

Powell said the Fed will adjust accordingly to the economy, and that he and his colleagues will raise interest rates if the economy grows faster than expected. "We at the Fed are absolutely committed to that mission and nothing will deter us from doing what we think is the right thing to do".

"Some" further rate hikes would be required, it said in a statement, reducing the expected number of raises next year from three to two.

Fed policymakers' median forecast puts the federal funds rate at 3.1 per cent at the end of 2020 and 2021, according to the projections.

Two Chinese nationals indicted by DoJ for 12-year hacking campaign
As is usual in the mildly cartoonish world of cybersecurity, APT10 has been referred to as Stone Panda, MenuPass and Red Apollo. Hacking targets included companies involved aviation, space and satellite technology, the indictment said.

Late fall brought a dust cloud of bad news for the USA economy, with shippers like Fedex cutting their global outlook for next year, chipmaker Micron Technology missing its revenue target as demand slides worldwide, and GM trimming 14,000 jobs as sales slow, not to mention a stock market limping into year end. The bond-buying has the effect of sending long-term bond yields lower, which reduces interest rates on mortgages and other kinds of long-term loans.

Stocks tumbled Wednesday as investors fretted over a growing list of concerns, including slowing economic growth, trade policy and the threat of a US government shutdown. Yet if the Fed had stressed its commitment to further hikes, it might have sparked fears that its intent to lift borrowing rates close to historic averages could shove the economy into a recession.

The central bank has raised rates with steady regularity as the US economy has strengthened. It marked the central bank's ninth hike since late 2015. For those increasingly anxious about a USA recession next year, the downgrade only feeds the concerns.

POLITICAL ECONOMY - The Fed ventured into the unknown during the crisis, slashing interest rates to zero and launching a massive asset purchase programme.

This belief may arise from the fact that the Fed typically begins easing monetary policy in times of economic distress, which often coincides with market turmoil.

Powell acknowledged the shift in the Fed's strategy.

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White House officials say Trump's rhetoric on China, particularly the tweet describing himself as "Tariff Man", rattled the confidence of United States investors and business leaders and caused the Dow to shed more than 1,100 points in a week.

Markets are also concerned about the ongoing trade dispute between the USA and China, which has lasted most of this year and shows few signs of easing, and forecasts for dip in economic activity next year.

Some analysts say the Fed may want to pause in its credit-tightening to assess how the economy fares in the coming months in light of the headwinds it faces. Contributing to this perception is Powell's view that rates appear to be just below the level the Fed calls "neutral", where they're thought to neither stimulate growth nor impede it. On news of the latest increase, stocks that had been up earlier in the day turned sharply lower, ending down 352 points, or 1.5%.

This week Wall Street has been focused on Fed Chair Jerome Powell's Wednesday press conference in which he claimed the economy is strong now, but outlined a possible slow down in 2019.

Trump's top economic and trade advisors blanketed the airwaves in recent days in an attempt to boost confidence in the U.S.

A rise in short-term interest rates and a fall in the long-date yield rekindled worries of an inversion in the yield curve, where shorter-debt yields become higher than longer-term ones.

New Survey Shows Rise of Nicotine Vaping Among US Teenagers
While the devices are believed by many to be safer than traditional tobacco cigarettes, they are far from harmless. The percentage of 8th-grade students vaping in the past 30 days increased too - from 3.5 percent to 6.1 percent.

And nearly half of chief financial officers think the economy will be in a recession in a year, according to the Duke University/CFO Global Business Outlook survey released this month.

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