Dow Jones closes in positive territory
Cautious optimism is spreading on Wall Street
01/04/2023, 10:18 p.m
The Fed minutes reveal that the monetary watchdogs no longer see a need to continue their rigid interest rate policy. They could slow the pace of rate hikes to a quarter-point in February. Investors on Wall Street breathe a sigh of relief.
Investors on Wall Street are cautiously optimistic following the release of minutes from the US Federal Reserve’s December meeting. Of the Dow Jones Index the standard values rose by 0.4 percent to 33,270 points. The broader one S&P 500 gained 0.8 percent to 3853 points. The index of the technology exchange Nasdaq climbed 0.7 percent to 10,459 points.
the US Federal Reserve signals a slower pace of monetary tightening in 2023 after a series of aggressive rate moves to fight inflation. As can be seen from the minutes of the December meeting, the monetary watchdogs see “considerable progress” in curbing inflation as a result of their tight interest rate policy last year.
The task now is to balance the fight against high inflation and the danger of an excessive economic slowdown. According to most monetary authorities, “flexibility and optionality” are required on the way to an even more dampening course for the economy: This suggests that the pace of interest rate hikes at the Fed meeting in early February could be curbed – to a quarter of a percentage point.
Hopes for the end of the Fed’s XXL interest rate hikes gave them wings US Treasury Bonds. Portfolio manager Dickie Hodges from the investment bank Nomura considers the prospects for the bond markets in the new year to be “almost consistently positive”. In the short term, the upward trend will probably be interrupted for the time being. The major central banks would still have to deal with unacceptably high inflation. “But the need to keep raising rates will soon be gone. And when the Federal Reserve finally tells us it has stopped raising rates, the rally in bond markets will be truly sustainable.”
Hope for recovery from corona wave in China
Falling bond yields helped tech stocks like Netflix, Apple and the graphics card manufacturer Nvidia to an increase of between 4.9 and 1.03 and 3.03 percent respectively. According to experts, rising inflation and higher interest rates will devalue future profits for high-growth tech companies. Meanwhile, hopes for a long-term recovery from the recent coronavirus outbreak in China supported shares in US-listed Chinese companies. The courses of the tech companies Alibaba, JD.com and baidu increased by up to 14.68 percent. The China optimism also inspired the coffee house chain Starbucks. The coffee maker’s shares rose 3.6 percent to $104.46.
The spin-off of the medical technology business has benefited the shareholders of the US conglomerate General Electric (GE) paid off. GE HealthCare shares rose nearly 6 percent to $70.16 on their first day of trading. GE shares also gained 3.8 percent. Lost at the same time Microsoft 4.37 percent to $229.1.