Interest rate cuts are coming
US investors relieved by Fed statements
March 20, 2024, 11:12 p.m
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As expected, the Fed is leaving the key interest rate unchanged, but the mood on Wall Street is still rising: There are still three interest rate cuts this year, some had already doubted that. The stock market reacts with a small price rally. Stock market newcomer Astera Labs is off to a flying start.
Investors on Wall Street have reacted with relief to the US Federal Reserve’s continued green light for several interest rate cuts this year. The Dow Jones Index the standard stocks extended their price gains and closed one percent higher at 39,512 points. The technology-heavy one Nasdaq advanced 1.3 percent to 16,369 points. The broad one S&P 500 increased 0.9 percent to 5224 points.
The monetary authorities around central bank chief Jerome Powell have decided to leave the key interest rate in the range of 5.25 to 5.50 percent. At the same time, however, they signaled that it should fall by 0.75 percentage points this year. “The market is relieved that the Fed is still forecasting three interest rate cuts this year. Recent high inflation readings have not derailed the Fed’s plan so far,” said Irene Tunkel, chief U.S. equity strategist at BCA Research.
P owell discussed inflation data, which was higher than expected in January and February. Powell emphasized that the values could be influenced by seasonal factors and that this would not change the overall scenario. However, the inflation path is not certain, which is why the Fed will continue to decide from meeting to meeting. Portfolio manager Thomas Altmann from asset manager QC Partners said June as the date for the first cut is “far from guaranteed, but it remains a realistic option.”
The returns went on a zigzag course US government bonds. After initial losses, the interest rate on ten-year US Treasuries rose to 4.318 percent from the previous 4.297 percent. The Dollar index, which measures the US currency against other important currencies, was barely changed at 103.78 points. The Gold price meanwhile rose by around one percent to $2,179 per troy ounce.
Boeing is growing despite higher costs
The individual values stood out PDD Holdings with a price increase of more than 14 percent at times. Quarterly figures above analysts’ expectations gave the Chinese e-commerce specialist’s shares a boost, with price gains declining to around 3.5 percent at the end of trading. The shares of the semiconductor specialist Astera Labs jumped around 72 percent in their Nasdaq debut. The issue price was $36. Chipmakers are among the biggest winners from the artificial intelligence boom because of high demand for advanced semiconductors used in data centers.
Despite the prospect of rising costs, shares of Boeing 3.7 percent plus. The aircraft manufacturer has announced that more money will be used in the first quarter than previously assumed. The background is the recent restrictions on the production of its 737 series.
Energy stocks came under pressure after oil prices, which had recently risen to multi-month highs in the wake of Ukrainian attacks on Russian refineries, fell. Oil company shares Chevron lost 1.3 percent. The North Sea variety Brent quoted 1.9 percent lower at $85.72 a barrel. US light oil WTI lost 2.3 percent to $81.55 per barrel. However, analysts only expected temporary profit-taking. “The fundamental backdrop has not changed and remains supportive given ongoing refining and export issues from Russia,” said PVM analyst Tamas Varga.