Gloomy margin forecast at Nike
US interest rate hike puts stock markets under pressure
03/22/2023, 10:11 p.m
Disappointed hopes in relation to interest rate policy are creating a depressed mood on the US stock exchanges. At first the important indices only reacted cautiously, then the mood turned negative. Meanwhile, Fed Chairman Powell gives an insight into the decision-making process for the renewed rate hike.
The US stock exchanges reacted to the US Federal Reserve’s interest rate decision with volatility on Wednesday. After moderate premiums, the stock exchanges finally fell sharply. The Dow Jones Index closed 1.6 percent lower at 32,030 points. For the S&P 500 was also down 1.6 percent. Also the Nasdaq Composite traded 1.6 percent lower. There were a total of 815 (Tuesday: 2,392) price winners and 2,202 (679) losers. 95 (83) titles closed unchanged.
The US Federal Reserve raised interest rates by 25 basis points as expected, but signaled that the turmoil in the banking system could end its hike campaign sooner than seemed likely two weeks ago. The policy rate is now in the 4.75 to 5.00 percent range. The decision of the Federal Open Market Committee (FOMC) was unanimous. It was the ninth rate hike in a row.
In their statement, the monetary authorities indicated that they may not hike interest rates again anytime soon. “The Council understands that further tightening of monetary policy may be appropriate,” it said. However, central bankers dropped wording that said the council believed “steady hikes” in interest rates would be appropriate.
Powell: Rate pause was contemplated
Fed Chair Jerome Powell said at his press briefing that Council members were considering a rate pause at this meeting. However, the inflation and labor market data were stronger than expected. “It’s important that we maintain confidence that our actions will contain inflation,” Powell said. The Fed is determined to bring inflation back to the 2 percent target.
LBBW analyst Elmar Völker believes that the rate hike was probably more difficult for the Fed than the previous rate hikes given the recent turbulence in the banks. The fight against inflation, which is far too high, still outweighs the increased risks to financial stability.
Dollar gives way
The dollar was significantly weaker following the Fed’s interest rate decision. The dollar index lost 0.8 percent. Shortly before the announcement, it had traded 0.1 percent lower.
Yields on the bond market fell as a result of the interest rate decision, after having recently risen significantly again as the situation in the banking sector eased. The Yield on ten-year bonds fell 15.1 basis points to 3.46 percent.
Oil prices were somewhat firmer. The prices for the Varieties Brent and STI increased by up to 1.1 percent. According to the state EIA, US crude oil inventories unexpectedly rose by 1.117 million barrels compared to the previous week. Analysts had forecast a drop of 1.5 million barrels here. However, gasoline stocks decreased more than expected by 6.399 million barrels.
The gold price was supported by the weaker dollar and falling yields after the previous day’s decline. The price of the troy ounce rose by 1.6 percent to $1,971.
Nike loses
In the case of individual values, the penitentiated Nike stock 4.9 percent a. The sporting goods manufacturer’s sales and profits exceeded expectations in the third fiscal quarter. However, the company struggles with high costs while discounts squeeze margins. These are granted to reduce excess inventory. Apple (-0.9%), the games of the baseball professional league association Major League Baseball (MLB) will not be broadcast free of charge this year. Apple Inc announced that a subscription will be required to watch the games on Apple TV+.
The biotech company Moderna (-2.6%) has announced that it will offer its Covid-19 vaccine in commercial distribution at a price of approximately US$130 per dose. That’s significantly more than what the US government paid under its exclusivity contracts.
Diebold Nixdorf increased by 5.3 percent. The troubled ATM maker has secured $55 million in funding that the company hopes will help it meet its near-term goals. The papers from game stop increased by 35.2 percent. The retailer specializing in video games has reported a profit for the first time after seven quarters with a loss. The reason for this was significant cost reductions. The battered First Republic Bank has hired additional external consultants. Lazard and McKinsey are to help the bank out of the crisis. The stock fell 15.5 percent.