Dow Jones closes in positive territory
Industrial recovery fuels interest rate fears
04/17/2023 10:32 p.m
The specter of the impending banking crisis has still not disappeared from the minds of stockbrokers. At the moment there are signs of recovery, but how long it will last is uncertain. The uptrend in industry is fueling concerns that the Fed will hike interest rates again.
Interest rate worries have hit Wall Street again ahead of more balance sheets from US banks. The Dow Jones Index of the standard values increased by 0.3 percent to 33,987.37 points. The broader one S&P 500 as well as the technology-heavy one Nasdaq Index climbed 0.33 percent and 0.28 percent to 4151.4 and 12,157.72 points, respectively. A surprisingly strong recovery in industrial activity in the state of New York caused nervousness, which stockbrokers believe gives the US Federal Reserve more leeway for further interest rate hikes.
Investors again focused on the quarterly results of banks. “So far the numbers have been encouraging and have eased fears about bank profitability. But things will get more difficult going forward,” said Stuart Cole, economist at Equiti Capital. “For regional banks, profitability will suffer as they are forced to focus on ensuring adequate liquidity rather than lending, while the larger banks face tougher times amid signs of a slowing economy.”
US investors fled after a disappointing quarterly result from the US securities service provider State Street. The titles collapsed by 9.27 percent. In addition to State Street, customer deposits at US regional bank M&T Bank also fell by three percent in the first quarter. At the financial company Charles Schwab, deposits fell by eleven percent compared to the previous quarter. Scored thanks to higher interest income Charles Schwab but with a surprisingly high return from investors; stocks recouped initial losses and gained 3.94 percent.
Google’s parent Alphabet under pressure
The three major banks JP Morgan, Citigroup and Wells Fargo surprised on Friday with strong quarterly results despite the recent turbulence. Investors are now eagerly awaiting Tuesday’s financial reports from Goldman Sachs and Bank of America. On the other side of the Atlantic, profit-taking had weighed on bank stocks. The European banking index, which rose by almost four percent last week, fell on Monday.
Meanwhile, a possible end for Google as the default search engine on countless Samsung smartphones is set alphabet to. The shares of the Google parent fell by 2.8 percent. The background is a report by the “New York Times”, according to which Samsung is considering replacing Google on its devices with the Microsoft search engine Bing. Bing is far behind Google in terms of market share, but has recently benefited from the integration of artificial intelligence (AI) from the ChatGPT operator OpenAI.