Markets close erratically
Fed rate pause prompts mixed reactions
06/14/2023, 11:30 p.m
As expected, the US Federal Reserve is refraining from further interest rate hikes, but does not want to rule them out in the medium term. The markets are reacting rather hesitantly to this. Four US stocks smear.
The markets reacted inconsistently to the statements made by the US Federal Reserve following its interest rate decision on Wednesday. At first they were read “falsely”. Stocks and bonds fell while the dollar strengthened. Then, during the Fed Chair Jerome Powell’s press conference, these moves were softened, most notably in the stock market.
The Dow Jonesindex lost 0.7 percent to 33,979 points. The S&P 500 increased by 0.1 percent and for the Nasdaq-Composite was up 0.4 percent. The 1,107 (Tuesday: 2,079) winners on the Nyse faced 1,877 (893) losers. 74 (111) shares closed unchanged.
After the key interest rate remained unchanged as expected, the Fed signaled that interest rate hikes were still possible this year; the FOMC majority expects two more hikes this year. There was hope on the markets that it could only stay with an increase. In addition, most Council members see interest rate cuts in 2024, but some market participants had bet that the turnaround in interest rates could take place in the current year.
oil prices easier
Oil prices tended to be lighter and thus lost interim premiums. The reason for this was weekly inventory data, which showed a significant increase in crude oil and gasoline. But the Fed’s indications of further rate hikes also pushed prices down. Initially, speculation on extensive economic stimuli in China and the associated surge in demand had supported it. The International Energy Agency (IEA) made a double-edged assessment: On the one hand, it expects global oil demand to increase by 2028. On the other hand, the growth in demand will slow down sharply, and demand for use for transport purposes is even likely to fall from 2026, according to the IEA in their annual report.
The dollar was down on a daily basis but trimmed losses on the back of Fed comments. The dollar index lost 0.3 percent. The Euro stood at $1.0826 in late trade down from $1.0860 before Fed comment. The euro’s daily gains were also related to the ECB’s assumption of a rate hike on Thursday.
UnitedHealth crashes
Among the individual stocks, shares of the United Health Group by 6.4 percent. The health insurance company is facing higher costs as seniors who would have postponed treatments during the pandemic are now catching up. “We’re just seeing more benefits (…)” said Medicare CEO Tim Noel.
The course of microvision slipped by almost 28 percent. The developer of laser beam scanner technology plans to raise fresh capital by issuing $75 million of common stock. Also Kura Oncology has completed a public offering of $100 million in common stock or prefunded warrants. The titles fell 9.8 percent.
The share of Intevac lost 14.2 percent. Designer and developer of thin film processing systems reviews strategic options due to hard disk drive order cancellations.