Investors are eyeing the Fed
Buying sentiment on Wall Street is fading
08/11/2022 10:54 p.m
After a strong previous day, the recent rally on Wall Street is already running out of breath. Many investors are puzzled by how much the US Federal Reserve intends to raise interest rates in September. Reluctance therefore prevails on the stock market.
Investors on Wall Street have been reluctant to come out of cover after recent gains. Of the Dow Jones Index the standard values rose by 0.1 percent to 33,337 points. The broader one S&P 500 recorded a minus of 0.1 percent and the index of the technology exchange Nasdaq fell 0.6 percent.
Investors wondered how much the US Federal Reserve would raise interest rates at the next meeting in September. “The weakening of the CPI in the US, while reducing fears that the Federal Reserve would act too aggressively, does not mean a decisive turnaround for monetary policy, as the main drivers of inflation, such as energy and commodity prices, remain high,” said Paolo Zanghieri from Generali Investments. The expert assumes a rate hike of 50 basis points in September – “with a certain risk of a further increase of 75 basis points like in July.”
US producer prices for July confirmed the trend of weaker inflation at consumer level: They climbed 9.8 percent in July compared to the same month last year, according to the Department of Labor. Economists polled by the Reuters news agency had an increase of 10.4 percent on the slip, after 11.3 percent in June. Compared to the previous month, producer prices surprisingly fell by 0.5 percent in July. Experts had expected an increase of 0.2 percent here – after an increase of 1.0 percent in June.
The recent slowdown in inflation in July had fueled speculation that the US Federal Reserve might be slowing down on rate hikes. However, US central bankers have since spoken out, warning against declaring victory over inflation just yet. San Francisco Federal Reserve District Chair Mary Daly told the Financial Times there was good news on the monthly data. “But inflation remains way too high and not close to our price stability target.” The Fed had recently fought rampant inflation with unusually large interest rate hikes. She wants to follow up next month. The key interest rate is currently in the range of 2.25 to 2.50 percent.
Among the individual values, the shares of the US media giant were the main drivers Walt Disney for conversation. The company is lowering its long-term subscriber forecast for Disney+, but is sticking to its profit target from the streaming business. Shares gained more than 5 percent.
The titles of amusement park operators were on the losing side Six Flags Entertainments, which collapsed by 20 percent. Revenue and net income declined in the second quarter. In the commodity market, oil prices rose after the International Energy Agency (IEA) raised its forecast for oil demand this year by 380,000 to an average of 2.1 million barrels a day. As a result, the hot summer and rising gas prices are boosting the use of oil to generate electricity. For the North Sea oil Brent and US oil STI went up by up to 2.4 percent.