End of the week with a profit
Investors are betting on a soft landing for the US economy
November 17, 2023, 10:51 p.m
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In the USA, the increased number of initial jobless claims is fueling hopes of curbing inflation. Wall Street closes with small profits on the last trading day of the week. It is also worth taking a look at companies that are building or closing plants in Germany.
Wall Street closed the last trading day of the week with small profits. With the Dow rising more than 2,500 points since its October low, investors became more cautious. The Dow Jones Index closed 2 points higher at 34,947. For the S&P 500 and the Nasdaq Composite it went up by 0.1 percent each. There were a total of 1,950 (Thursday: 1,086) price winners and 916 (1,761) losers. 64 (89) shares closed unchanged.
Overarching expectations continued to support the hope that the interest rate peak in the USA has been reached. This was manifested by lower than expected inflation data over the course of the week. This was further supported by the stronger than forecast increase in weekly initial jobless claims the previous day.
Investors are also betting on a “soft” landing for the US economy. However, yields on the US bond market increased, especially at the short end, after sales in early trading. The Yield on ten-year securities was now trading below the 4.40 percent mark. In late business it showed little change at 4.44 percent.
Oil prices with recovery
“The main reason for the recent rally is that Wall Street is confident that the Federal Reserve will not raise interest rates again this cycle. In fact, investors now expect the Fed to begin cutting rates in less than six months.” , according to Crossing Wall Street.
The dollar gave up temporary gains and was in the red. The Dollar index decreased by 0.5 percent. The analysts at Danske Bank are betting on the euro in the short term; they believe it has the potential to reach $1.10 over the next month. They point to the recent US data, which was weaker than expected. In the medium term, over a period of six to twelve months, Danske expects the euro exchange rate to fall and bases this on the relative trading conditions, the real growth prospects and the relative development of unit labor costs.
After the previous day’s massive drops of almost 5 percent to their lowest levels in four months, oil prices recovered. WTI and Brent rose in price by around 4 percent. With a view to the previous day, UBS spoke of a combination of short selling and the fall through technical brands. However, there are still concerns about demand. The recovery at the end of the week could be due to speculation that Saudi Arabia would extend production restrictions into the new year due to the fall in prices, according to ING.
Investigating Applied Materials?
When it came to individual stocks, the shares went from Applied Materials 4 percent down, even though the company exceeded market expectations in the fourth fiscal quarter and the outlook for the current quarter was also above expectations. But according to media reports, the US Department of Justice has opened an investigation because the company is said to have supplied systems to a Chinese company without the necessary licenses.
Gap On the other hand, the price jumped by 30.6 percent. The clothing retailer reported better-than-expected third-quarter results and higher profit margins, citing easing pressure to cut prices. The annual outlook was confirmed. Eli Lilly rose by 0.5 percent. The pharmaceutical company is investing $2.5 billion in expanding production capacity in Germany.
Goodyear Tire & Rubber (-0.1%) is closing two production facilities in Germany to reduce production costs and improve its competitive position in the EMEA region. The plants in Fürstenwalde and Fulda are affected.