Thursday, December 16, 2021
Fed decision continues to have an effect
Tech stocks suffer from interest rate hikes
After a Fed-related interim high, the Dow Jones is pausing. However, the global announcements of interest rate hikes are mainly affecting technology stocks. The Nasdaq is also slipping sharply.
After the recent price gains, US investors are shifting down a gear. The US standard value index Dow Jones lost 0.1 percent on Thursday to 35,897 points, after gaining a good 1 percent on Wednesday. The technology-heavy Nasdaq fell by 2.6 percent (15,863 points), whereby the broad S&P 500 slipped 0.9 percent into the red (4,668 points).
The decision of the US Federal Reserve to cut back its securities purchases more quickly and to signal three rate hikes for 2022 will be viewed positively, said analyst Susannah Streeter from the brokerage firm Hargreaves Landsdown. “Investors are primarily thinking about inflation. So they welcome the Fed’s action to keep the lid on it. In addition, the growth prospects for the US economy are good,” said Ulrich Stephan, chief investment strategist for private equity. and corporate customers at Deutsche Bank.
The latter gives a boost to cyclical stocks, said portfolio manager Paul Nolte of asset manager Kingsview. Technology stocks, on the other hand, suffered from the prospect of interest rate hikes. Experts say that higher interest rates will devalue future profits for these high-growth firms. The shares of Amazon, Apple, Facebook, Netflix and the Google parent Alphabet lost up to 3.9 percent. Because of its high level of borrowed capital, the industry is considered to be particularly sensitive to interest rates and thus a loser from a tighter monetary policy.
The US currency also came under selling pressure. the Dollar index, which reflects the exchange rate to major currencies, lost 0.4 percent. Apparently, with a view to the interest rate forecasts of the Fed management team, the so-called dot plots, investors realized that interest rates will rise faster but not higher than previously expected, wrote the analysts at Rabobank. In the commodities market, on the other hand, investors focused on the optimistic statements made by Fed chairman Jerome Powell on the economic outlook. In addition, there are encouraging data on demand from the US Department of Energy, said analyst Tamas Varga from the brokerage company PVM. The US grade of oil WTI The price rose by 3.0 percent to 72.55 dollars a barrel (159 liters).
One of the favorites on the US stock market was Accenture. The titles of the IT and consulting firm rose almost seven percent. The quarterly results exceeded expectations in all areas, praised analyst Surinder Thind from the investment bank Jefferies. The company had quarterly sales of $ 14.97 billion and increased new business by 30 percent to $ 16.8 billion.
The titles of Vir Biotechnology, which were 4.7 percent more expensive. The EU health authority EMA granted this together with GlaxoSmithKline developed drug for the treatment of coronavirus patients approval. Glaxo shares in London meanwhile rose to a year and a half high of 1,624.2 pence. competitor Regeneron on the other hand had to accept a price minus of almost four percent. According to the company, his Covid drug is less effective in treating the newly discovered variant of Omikron.
The papers of Lennar on the other hand, headed for the largest daily loss in seven months with a minus of four percent. The construction company’s quarterly profit fell short of expectations, criticized analyst Carl Reichardt from the brokerage house BTIG. The company made $ 1.19 billion.