Buffet hits Apple
New interest rate hopes are driving Wall Street
May 6, 2024, 11:00 p.m
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Investors’ hopes of interest rate cuts in the foreseeable future are given new fuel by the latest labor market report. Good for the stock markets, especially the Nasdaq is rising significantly. Gold is also becoming more attractive again.
Re-invigorated bets on an interest rate turnaround in the US this year continue to drive Wall Street forward. The Dow Jones Index the standard values closed 0.5 percent higher at 38,852 points. The broader one S&P 500 rose one percent to 5180 points and the index of the tech stock exchange Nasdaq by 1.2 percent to 16,349 jobs.
Surprisingly weak US labor market data had already boosted stocks on Friday. The cooling job engine in the USA once again fueled hopes of falling interest rates after expectations of a change in interest rates by the US Federal Reserve Bank had weakened significantly since the beginning of the year. “The economic news was spot on,” said Mark Luschini, investment strategist at Janney Montgomery Scott. “There are still signs of underlying strength in the economy, which should enable continued earnings growth and create an environment in which share prices can rise.” At the same time, the strength is not so pronounced that it could once again endanger the Fed’s current stance.
Oil prices are rising
On the foreign exchange market, US job data also eased fears that the Fed would keep interest rates high for a longer period of time. The Dollar index fell 0.1 percent to 105.11 points and was in the red for the fourth time in a row. “We continue to expect two interest rate cuts this year, in July and November,” Goldman Sachs experts said. The employment report for April was weak, but not poor.
The Gold price meanwhile rose by more than one percent to $2,324 per troy ounce. “The bearish move we’ve seen over the past few weeks may actually be losing momentum, opening up the possibility that gold prices will resume their upward trend,” said Daniel Ghali, commodities strategist at TD Securities. Gold is traditionally viewed as a hedge against inflation. At the same time, gold becomes more attractive as an investment with lower interest rates. The ongoing tensions in the Middle East also supported the precious metal.
Also the Oil prices rose, fueled by price increases in Saudi Arabia. The North Sea Brent variety and the US WTI variety each rose by half a percent to $83.37 and $78.55 per barrel (159 liters), respectively.
Low-cost airline Spirit Airlines disappoints investors
The individual values gave Apple 1.7 percent after stock market guru Warren Buffett’s investment company reduced its stake in the iPhone manufacturer by 13 percent to 790 million shares. However, Buffett told shareholders: “Apple will remain our largest investment unless something dramatic happens that significantly changes the allocation of capital.”
There were also long faces at the US low-cost airline Spirit Airlines: After a sales forecast for the second quarter that was below expectations, the titles fell by 9.7 percent. According to the airline, domestic demand has improved only slowly. In addition, dozens of their aircraft have been shut down. The airline is suffering from problems with Pratt & Whitney Geared Turbofan (GTF) engines. Because of possible defective turbine discs, affected aircraft must remain on the ground for inspections. Spirit shares have lost more than 75 percent of their value this year.
In contrast, the shares from Paramount by 3.1 percent after the US film company ended its exclusive talks about a possible takeover by Skydance Media without reaching an agreement. This means that offers from other bidders for the company, which is groaning under high debts, can now be examined.