Hope for interest rate cuts
US investors end a strong stock market week with caution
May 10, 2024, 11:17 p.m
Listen to article
This audio version was artificially generated. More info | Send feedback
It is still unclear when the Fed will start easing interest rates. US investors are still hoping that this will happen soon. But the US central bank doesn’t offer much hope. The uncertainty is dampening the mood on Wall Street.
At the end of a strong stock market week, US equity investors held back from making larger commitments. The Dow Jones Index the standard values closed 0.3 percent higher at 39,512 points. The broader one S&P 500 gained 0.2 percent to 5223 points. The technology stock market index Nasdaq was virtually unchanged at 16,341 points. A series of economic data recently signaled a slowdown in the US labor market and gave investors hope for more than one interest rate cut from the US Federal Reserve this year.
However, doubts remain about when easing will begin. Fed official Lorie Logan warned that price pressures were still too high for easing. Futures traders are currently pricing in a 45 basis point rate cut by the end of 2024, with the first 25 basis point cut expected in September.
The buying mood was also dampened by the fact that the mood of US consumers deteriorated surprisingly sharply in May. The barometer for consumer confidence fell 9.8 points to 67.4, the monthly survey from the University of Michigan showed. Experts polled by Reuters had expected a slight decline to 76.0 points. There is also a risk of an intensification of the trade dispute between the USA and China.
President Joe Biden is expected to announce new tariffs on Chinese goods next week, targeting strategic sectors such as electric vehicles, solar panels and steel. Taxes are also expected on manufactured medical devices such as syringes and personal protective equipment. On the foreign exchange market, the dollar index was up 0.1 percent at 105.3 points. Shares in Novavax jumped almost 99 percent after agreeing to a licensing deal with Sanofi for its Covid-19 vaccine.
It works at Nvidia
Through the deal with the French, the US pharmaceutical company has eliminated investors’ doubts about the company’s continued existence. Like the other Covid vaccine providers, Novavax struggled with a collapse in demand as the pandemic ended. Shares of artificial intelligence (AI) voice platform SoundHound AI rose 7.1 percent after a more optimistic outlook. The company, in which the leading AI chip manufacturer Nvidia also has a stake, generated more than expected in the first quarter and promised increasing margins. Nvidia shares gained 1.3 percent.
At the fast food giant McDonald’s, investors were attracted by the prospect of measures to increase business. Shares gained 2.6 percent after reports of the introduction of a five-dollar meal circulated. This is intended to attract more customers in the United States. Moderna, on the other hand, fell by 4.4 percent. The US health agency’s decision on the respiratory syncytial virus (RSV) vaccine will be delayed.