Interest rate turnaround not foreseeable
Fed decision triggers flash in the pan on US stock exchanges
May 1, 2024, 11:35 p.m
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The Fed is leaving the key interest rate where it is – and, according to central bank chairman Powell, it will likely stay that way for quite some time. Wall Street initially rose sharply after the interest rate decision, but only for a short time. At the end of the day only the Dow closed with a slight gain.
After the US Federal Reserve’s interest rate decision, the US stock markets have not found a common direction. After the indices initially turned significantly positive, the most important market barometers were once again mixed at the end of the trading day. The Dow Jones Index the standard values rose 0.2 percent to 37,903 points from trading. The technology-heavy one Nasdaq However, it fell 0.3 percent to 15,605 points. The broad one S&P 500 lost 0.3 percent to 5,018 jobs.
In view of the stubbornly high inflation in the USA, the Federal Reserve is shying away from a change in interest rates. The monetary authorities left the key interest rate in the range of 5.25 to 5.50 percent. They have seen no recent progress toward their two percent inflation target.
A turnaround in interest rates is not appropriate as long as there is no more confidence that the inflation rate is getting closer to the Fed’s target in the long term, Fed Chairman Jerome Powell emphasized to the press. It is becoming apparent that it will take longer than initially thought to maintain this level of trust. He left open the timing of a turnaround in interest rates, which traders believe could be delayed until September or even November. Powell believes it is unlikely that the next interest rate hike will be an increase.
Given that the US economy continues to run smoothly, the Fed can allow itself the “luxury” of being able to remain patient. The European Central Bank, on the other hand, had already prepared the financial markets for a cut in June.
Starbucks is going crazy
The accounting season continued for companies. The papers from Advanced Micro Devices lost almost nine percent after the group forecast for AI chip sales failed to convince investors. The shares of Amazon On the other hand, after a quarterly balance that was better than expected, they increased by 2.2 percent.
The US pharmaceutical company Pfizer is defying the slump in demand for corona drugs with savings and is looking more optimistically into the future. The share price therefore increased by around six percent. It went downhill by almost 16 percent Starbucks. The coffee house chain has suffered a surprising decline in sales due to weak demand in its main markets of the USA and China.
On the other hand, the shares from were in demand DuPont with a markup of more than eight percent. After a better-than-expected first quarter, the US chemical company increased its forecast for 2024. Adjusted earnings per share are now expected to be between $3.45 and $3.75 instead of the previously expected range of $3.25 to $3.65.