Moderate losses
Wall Street weakens ahead of Fed decision
September 19, 2023, 10:34 p.m
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The day before the US Federal Reserve’s key interest rate decision, investors in New York are shying away from risk. Although analysts expect a pause in interest rates, the economic data does not indicate an end to the tightening. Oil prices continue to rise.
Wall Street ended trading in the evening with a slight loss. Stock market investors held back from building up new positions ahead of the Federal Reserve’s monetary policy decision tomorrow, Wednesday. In addition, there were further rising yields on the bond market, where the yield on ten-year bonds climbed to its highest level in 16 years. Oil prices also continued to rise, but came back more clearly from the daily highs.
The market expects the Federal Reserve to keep interest rates on hold, but amid persistent inflationary pressures, players are increasingly skeptical about accompanying hints of future rate hikes. This was also fueled by unexpectedly high inflation in Canada. Consumer prices there accelerated to 4 percent in August; an increase to 3.8 from the previous 3.3 percent was expected.
The Dow Jones Index fell by 0.3 percent to 34,518 points. The S&P 500 and the Nasdaq Composite fell by 0.2 percent each. There were 1254 (Monday: 1298) price winners and 1636 (1579) losers. 99 (136) titles closed unchanged.
According to Ipek Ozkardeskaya, senior analyst at Swissquote Bank, recent above-forecast U.S. economic data and 10-month highs in oil prices could prompt the Fed to take a “hawkish pause.” “The central bank is likely to revise its growth expectations significantly upwards due to robust consumer spending and solid growth and will therefore certainly be cautious and appropriately hawkish this week,” the participant added. The accompanying statements are likely to indicate a further interest rate hike before the end of the year, said Ozkardeskaya.
In terms of economic data, construction starts and building permits for August were published before the starting bell. Construction starts fell by 11.3 percent compared to the previous month, while economists had only expected a decline of 1.5 percent. Building permits, on the other hand, rose more than forecast compared to the previous month.
Bond yields and oil remain high
They invested in the bond market Returns again strongly. The yield on 10-year securities rose by 5.8 basis points to 4.36 percent, which was the highest level since 2007. Participants pointed to concerns that the US Federal Reserve will raise interest rates this year.
The dollar On the other hand, fell again after the most recent phase of strength. The dollar index fell by 0.1 percent. The focus here was primarily on the Fed’s decision, which is unlikely to result in an interest rate increase.
For the Oil prices it continued upwards. The quotes for Brent and WTI improved by 0.2 percent each. In the meantime, the WTI price had already increased by around 2.5 percent. Oil prices have risen sharply since Saudi Arabia and Russia extended production restrictions. Given the rally in oil prices, some analysts are predicting a price of $100 a barrel before the end of the year. ING analysts expect political pressure on the Saudis from Western consumers to increase production will increase once prices reach $100.
The Gold price showed slight levies against the backdrop of continued rising yields. The dollar, which continues to strengthen, is also weighing on sentiment, it said. In addition, eyes are on the US Federal Reserve.
Strong stock market debut from Instacart parent Maplebear
The shares of Maplebear, parent of the US grocery delivery service Instacart, have had a brilliant stock market debut. The first price was 42 dollars, 40 percent above the issue price of 30 dollars. The issue price was previously set at the upper end of the $28 to $30 range. At the first price level, the company would be valued at $14.2 billion. At the end of trading, the price was $33.70, 12.3 percent above the issue price.
For the share of Walt Disney it fell by 3.6 percent. The group plans to invest around $60 billion over the next 10 years in the business unit that houses the theme parks and cruise business. This is almost twice as much as the investment that has gone into the unit over the past 10 years.