Fed does not think about rate hike: US central banker makes investors optimistic

St. Louis Fed President Jerome Bullard is optimistic about the future. The central banker expects the US economy to grow strongly in the third quarter. At the same time, he sees no need for rate hikes. Bullard's statements are received extremely positively on Wall Street.

On Wall Street, the upswing continued over the weekend. First of all, the speech by US Federal Reserve President Jerome Powell from the previous day was supported again. Statements from James Bullard, the President of the St. Louis Fed, were later added. He specified future monetary policy by saying the Fed could tolerate inflation of 2.5 percent for "quite a while". He expects economic growth in the third quarter of 20 percent. The recession is over, but the Fed is not thinking about rate hikes at the moment.

S&P 500 3,508.48

Of the Dow Jones Index, Laggards among the main indices, eliminated the losses since the beginning of the year and is now in positive territory for 2020. It gained 0.6 percent to 28,654 points. Of the S&P 500 improved by 0.7 percent and again reached a fresh all-time high. Of the Nasdaq composite rose by 0.6 percent.

Powell's statements on Thursday were already seen as confirmation "that key interest rates will likely remain lower in the short to medium term," as market strategist Arnab Das from Invesco recalled. The prospect of a long period of supportive monetary policy beyond the corona crisis with rising corporate profits had already supported Wall Street the day before.

Hewlett-Packard
Hewlett-Packard 16.77

Consumer spending provided a split picture: the current July data just missed the forecast, but the upward revision of the previous month was significantly higher, retailers note. "In total, spending in two months with the revision rose by 8.2 percent, while the expectation had only seen 7.7 percent," says a market strategist. This is astonishing, since the income of US citizens still shows a slight decrease for two months. The development of inflation depends heavily on economic growth and thus on private consumption in the USA. The data on this was encouraging, as US consumer sentiment brightened more than expected in August. In contrast, the Chicago Purchasing Managers' Index fell short of the forecasts.

Coca-Cola and HP are increasing

On the stock market, shares rose from HP by 6.1 percent. The PC manufacturer benefited from the corona pandemic in the third fiscal quarter, which led to unusually high sales above market estimates. Also Workday is among the winners of the pandemic. The provider of cloud-based computer software for accounting, personnel management and corporate planning reported a leap in sales above market forecasts in the second quarter. The share price shot up 12.6 percent

Coke
Coke 41.70

The titles of Gap gained 0.9 percent. The clothing retailer has exceeded market expectations with its second quarter results. Ulta Beauty papers rose 5.8 percent. The cosmetics retailer exceeded market expectations in the second quarter. Retail stocks are also supported by positive consumer spending. Coke said it had a cost of $ 350 million to $ 550 million due to job cuts from the third through the first quarter – severance payments, stock compensation and other employee benefits. The share gained 3.3 percent.

On the foreign exchange market, Powell's statements only developed their expected effect with a delay, because the WSJ dollar index decreased 0.8 percent. Investors priced in a long period of low US interest rates, it said. Of the Euro benefited from an improved business climate in the euro zone and rose to 1.1900 US dollars after a daily low of 1.1811.

Long-term low interest rates drove investors to gold. The dollar weakness also provided support. The troy ounce rose 1.8 percent to $ 1,964. At oil Little happened, the prices remained by and large at the previous day's level. Investors were waiting for new information about the hurricanes in the Gulf of Mexico and the local crude oil production, it said.

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