Dow Jones closes in positive territory
Interest rate decision ensures price gains
November 1, 2023, 9:59 p.m
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Since the US economy is proving resilient despite the tight labor market, the US Federal Reserve will not raise the key interest rate any further. Investors breathe a sigh of relief. The big loser in the individual stocks is the US chemical company Dupont de Nemours.
Wall Street ended trading with surcharges. The US Federal Reserve’s interest rate decision offered no surprises. The Fed left its key interest rate at a 22-year high, but left open the possibility of raising it later to curb inflation. The key interest rate remained in the range of 5.25 to 5.50 percent. The Federal Open Market Committee’s (FOMC) interest rate decision was unanimous. The constant level of interest rates was generally expected. The stock market was supported by the significant decline in yields on the US bond market.
The Dow Jones Index rose by 0.7 percent to 33,275 points. Before the Fed’s decision was announced, the index was at 33,130 points. For the S&P 500 it went up by 1.1 percent. The Nasdaq-Composite gained 1.6 percent. On Wall Street, the 1964 (Tuesday: 2069) price winners faced 927 (834) losers. 77 (173) titles closed unchanged.
“We are not yet confident that we have achieved the level of monetary tightening necessary to return to the two percent inflation target,” Fed Chairman Jerome Powell said at his press conference. The US economy has shown resilience and the labor market remains tight, although financial conditions have become tighter, said Powell. “The strong growth could fuel inflation, which would require tighter monetary policy.” However, the Fed is acting cautiously; Decisions would be made based on data and outlook and on a meeting-by-meeting basis. However, interest rate cuts are not up for debate.
“In our view, the statement was balanced. On the one hand, the Fed chose not to soften its tightening stance. On the other hand, when listing the factors that are likely to weigh on the economy, it also took into account financial conditions in addition to the credit conditions already mentioned ” said Ellen Zentner, chief U.S. economist at Morgan Stanley.
The day’s economic data showed an inconsistent picture. The ISM index for US industry weakened in October, while economists had expected an increase. In contrast, activity in US industry increased in October. The Purchasing Managers’ Index compiled by S&P Global in this sector is now exactly 50.0 points, which was in line with forecasts.
Yields are falling sharply
They built on the bond market Returns their taxes will still be a little off after the Fed’s decision. But they had already recorded a significant decline beforehand. The ten-year yield fell 16.8 basis points to 4.76 percent. Pension prices were fueled by weak labor market data. Employment in the private sector rose slightly less than expected in October, according to the labor market service provider ADP. Long-term yields fell particularly sharply after the US Treasury published details of the quarterly refund. The Treasury wants to increase the scope of the placement of cross-country skiers less significantly than initially thought. “Therefore, investors are now buying on the secondary market because the supply on the primary market is tighter,” it said in trading.
The dollar gave up its gains with the Fed’s interest rate decision and Powell’s statements and showed little change. In advance he had Dollar index still up 0.3 percent. The falling yields on the bond market had already caused the greenback to come back from its daily high. The U.S. October jobs report on Friday could help adjust further expectations for the Fed, said Edward Moya of Oanda.
The Oil prices closed hardly changed. These remain an important sentiment indicator, as further escalation in the Middle East is likely to drive prices higher. With the crisis in the Middle East, a risk premium of probably three to five dollars per barrel has already been priced into oil prices, it was said. The slight increase in weekly crude oil inventories in the USA did not provide any impetus. This was largely within expectations.
The Gold price gave in slightly. The troy ounce fell by 0.3 percent to 1978 dollars. The reaction to the US interest rate decision and Powell’s statements was moderate. Kraft Heinz Although it earned less in the third quarter, it exceeded profit expectations thanks to price increases. The US food company is becoming more optimistic about its profit for the year as a whole. The price gained 2.4 percent.
The US chemical company Dupont de Nemours sold less than expected in the third quarter and also disappointed with its sales forecast – the share price lost 8.2 percent. Advanced Micro Devices rose by 9.7 percent. The chip manufacturer presented surprisingly good figures for the third quarter.