Dow treads water
Wall Street rally falters
6/6/2023 10:53 p.m
The approaching US interest rate decision keeps Wall Street locked in a tight trading range again. Investors continue to wrestle with the question of whether the Fed will briefly pause its rate hike streak or pause for a longer period.
After a subdued start to the week, New York stock prices did not really gain momentum on Tuesday either. The uncertain economic prospects and the interest rate decision by the US Federal Reserve, which was expected on June 14, remained the focus of interest after the US debt dispute had been settled. Investors have been acting more cautiously again lately. The leading index Dow Jones Industrial closed just under 0.03 percent up at 33,573.28 points. Market breadth developed better S&P 500, which is on the verge of re-entering what is commonly defined as a “bull market”. It ultimately rose by 0.24 percent to 4283.85 points. In the second-line stocks segment, price rallies at some US regional banks were positive. For the tech-heavy Nasdaq 100 it was only just 0.01 percent up to 14,558.09 points.
The tech rally of the past few weeks, which had led Apple shares to a record high the day before, lost some momentum. Lately it has become the credo of investors that the economic risks have not diminished as a result of the US debt deal. “The compromise in the USA provides for a noticeable reduction in government spending, which increases the likelihood of a recession,” said LBBW’s chief economist, Moritz Krämer.
There are also doubts as to whether the Fed is really at the end of its interest rate cycle. The UBS economist Jonathan Pingle does not initially expect a rate hike in mid-June, but then expects it to do so in July. He referred to the persistently high level of inflation and the recent robust development on the US labor market. In a study, he pushed back the time he expected for an interest rate cut to December.
Coinbase in focus
On the corporate side, crypto exchanges remained in focus: after the Binance platform, the US Securities and Exchange Commission (SEC) is now also accusing it Coinbase violations of the Securities Act. The accusation: The company operates an illegal securities trading exchange and also carries out certain other financial services without the necessary approval. Expert Mark Palmer from Berenberg Bank emphasized that a significant part of Coinbase’s sales is at stake. The shares, which had already lost 9 percent the previous day due to a similar lawsuit against Binance, now slumped further by 12 percent. At times they even fell by more than 20 percent, to their lowest level since mid-January.
The share of MicroStrategy was also affected by the Binance lawsuit at the beginning of the week, as the business software group is known for guarding a large Bitcoin hoard. With an increase of eight percent, the previous day’s losses have now almost been offset. Berenberg analyst Palmer referred to a reported multi-year partnership with Microsoft in the field of artificial intelligence. At Apple After a temporary record high the day before and temporary profit-taking, things calmed down again on Tuesday. Initially higher price losses reduced to minus 0.2 percent.
Aircraft manufacturer papers Boeing also dropped significantly at times due to reported delivery delays for the 787 long-haul jet, but also put their price losses back into perspective to 0.7 percent. The fact that a dispute between the major golf organizations PGA Tour and DP World Tour and the LIV Tour, financed from Saudi Arabia, was surprisingly settled also caused a stir. A future partnership was agreed to standardize the sport of golf. Stocks focused on the sport, such as Topgolf Callaway Brands or Acushnet Holdings, benefited from this with increases of up to 5.5 percent.