Dow Jones closes in the red
Fed spoils investors’ mood with interest rates
09/21/2022, 10:28 p.m
Fed Chairman Powell does not want to rule out a recession, but is sticking to his strict course. Further increases are to follow the new interest rate hike of 0.75 points. On Wall Street, this sends prices plummeting.
The markets have completed a dizzying rollercoaster ride with the interest rate decision and the accompanying statements from the US Federal Reserve. In the end, the participants in the stock market opted for the “hawkish” reading and sent the indices to the daily low. Of the Dow Jones Index closed 1.7 percent lower at 30,184 points, the S&P 500 noted 1.7 percent lighter. For the Nasdaq Composite was down 1.8 percent. There were a total of 1,031 (Tuesday: 606) winners and 2,163 (2,643) losers. 159 (131) titles closed unchanged.
Hawkish statements by the Federal Open Market Committee pushed the stock indices into the red. While the interest rate hike of 75 basis points was in line with expectations, the monetary watchdogs see a tighter interest rate path. For example, they now expect the key interest rate to be 4.6 percent at the end of 2023 after 3.8 percent previously. Stocks, gold and bonds – especially the short end – came under pressure while the dollar strengthened.
However, during the subsequent remarks by Fed Chair Jerome Powell, the assets turned in the opposite direction, but mostly not sustainably. Powell said, among other things, that there are first signs of normalization on the labor market. The projections point to 125 basis points of further rate hikes this year, Powell said, but there is a large group that thinks 100 is enough. He went on to say that a recession cannot be ruled out.
Dollar rises – oil prices lighter
Of the dollar ended up holding clear daily gains, which he had meanwhile expanded even further. The euro fell to a yearly low of $0.9813 according to the FOMC projections, but finally traded slightly above it at $0.9839 – still a daily gain of 1.3 percent for the US currency.
Oil prices saw minor losses. On the one hand, Russia’s President Vladimir Putin announced partial mobilization. On the other hand, the projections for a tighter interest rate path weighed on them.
Bonds were mixed. On the short end, yields rose as they did before the rate decision, with the 2-year trading near a 15-year high. By contrast, yields on longer maturities came under pressure. The price of gold rose after initially coming under pressure from statements by the Federal Open Market Committee. Participants primarily attributed this to the ebb and flow of the dollar.
Beyond Meat extend yesterday’s minus
The individual values went down after a good 6 percent minus the day before Beyond Meat down another 0.8 percent. The manufacturer of meat substitutes had announced the suspension of its COO after the weekend after he was temporarily arrested after a physical altercation with another motorist.
coty increased by 3.2 percent. Before the start of its investor event, the cosmetics group is confident that in the next three years up to the end of June 2025 it will roughly double the sales of its skin care division to around 500 to 600 million dollars.
The share of MC Donalds lost 1.7 percent after a US federal judge allowed a $10 billion damages lawsuit against the fast-food chain over discriminatory advertising practices. General Mills increased by 5.7 percent. The food maker beat earnings expectations and upgraded its outlook.