Investors in wait
Fed and balance sheets cloud Wall Street sentiment
04/19/2023 10:54 p.m
In the middle of the week, the US stock exchanges closed little changed. Investors are holding back. Mixed company balance sheets are causing little enthusiasm and the future monetary policy of the Fed is also causing headaches. But there are also clear winners of the trading day.
Mixed corporate balance sheets and worries about the future monetary policy of the US Federal Reserve dampened sentiment on Wall Street in the middle of the week. The Dow Jones Index the standard values closed 0.2 percent lower at 33,897 points. The broader one S&P 500 noted, however, hardly changed at 4154 digits. The Technology Exchange Nasdaq also stagnated at 12,163 jobs.
The highly anticipated numbers and forecast from Netflix, which heralded the start of the earnings season for US tech giants on Tuesday evening after a series of bank balance sheets, did not excite investors. The streaming service expects a profit for the second quarter slightly below the experts’ forecasts. “The consensus among American companies is that we have good times now, but tougher times lie ahead,” said Brian Jacobsen, strategist at wealth manager Allspring Global Investments.
Also a decline in profits at the major US bank MorganStanley depressed investor sentiment. In addition, double-digit percentage increases in prices in Great Britain fueled new concerns about the Fed’s future strategy in its fight against inflation, despite the Bank of England’s tight interest rate policy. At 10.1 percent, the British inflation rate remained the highest in Western Europe. “This development also devalues the recent declines in the inflation rates in the USA and the euro zone,” said analyst Konstantin Oldenburger from broker CMC Markets.
US economic activity has become the Federal Reserve fed according to little changed in the past few weeks. Expectations for future growth also remained largely unchanged, the Fed said in its Beige Book economic report. The survey ran until April 10 and is based on surveys and interviews in twelve districts. The growth on the labor market has weakened somewhat and the price increase has slowed down, it was also said. According to the report, several Fed districts also noted that banks have tightened their lending standards. The reason for this is the increased uncertainty in the industry.
Demand for crude oil falls
Expectations of interest rates rising further pushed the US currency. The dollarindex, which measures the value of the greenback against other major currencies, gained 0.23 percent to 101.96 points. This made crude oil, which is traded in dollars, more expensive for investors in other currency areas and thus depressed demand. The North Sea variety Brent and the light US variety WTI are cheaper by around two percent to 82.95 and 78.99 dollars per barrel (159 liters) respectively.
They have thus reduced their profits since the OPEC subsidy cut announced at the beginning of April. “We believe that the market has become too focused on the supply side of the global oil equation following the OPEC production cuts and that global oil demand is significantly weaker than is widely believed,” wrote the experts at energy consultancy Ritterbusch.
You can read about how the trading day went on the Frankfurt trading floor in our stock market day.
In the case of the individual stocks, investors focused on the financial reports of the companies. Netflix lost 3.2 percent. Results above expectations, on the other hand, boosted the papers of Western Alliance and most other US regional banks. Western Alliance jumped 21 percent to $39.35. Five weeks ago, the papers had fallen to $ 7.46 in the wake of the bank quake at the time. Rivals PacWest, Zions and First Republic also made significant gains on Wednesday.
Disappointing numbers pushed against it Fulton down 2.7 percent. More price cuts Tesla in advance of the quarterly figures presented after the close of trading. Stocks fell 2 percent. Competitors Rivian and Lucid also lost in their wake. After price cuts in Asia and Germany, Tesla also cut the prices for its Model Y and Model 3 in the USA by $3,000 and $2,000, respectively, according to the company website. Experts expect that this could put a lot of pressure on profit margins in the industry.