Friday 20th August 2021
Optimism returns
US stock exchanges overcome the Fed scare
The US Federal Reserve creates a moment of horror in the middle of the week. The monetary authorities are discussing an end to the aid. Investors cash in. But now the Fed is rowing back a little and quarterly figures are creating confidence. Investors are picking up again.
Decreasing concerns about the US Federal Reserve’s deliberations about an early exit from the billion-dollar aid gave the US stock exchanges a boost at the end of the week. Of the Dow Jones Index rose by 0.6 percent. The broader one S&P 500 won 0.8 percent and the technology-based Nasdaq Composite 1.2 percent.
While the US Federal Reserve had signaled in the minutes of its meeting that it would begin to repay its bond purchases in the current year, the President of the Fed branch in Dallas, Robert Kaplan, has now backed off: he would answer his recently made demand for one Rethink a rapid reduction in monthly bond purchases if the impression arises that the spread of the delta variant of the coronavirus is holding back economic growth.
This was received with relief by investors. Investors increasingly took up stocks again, encouraged by a new series of good company figures. Nonetheless, fear smoldered in the background over the delta variant of the coronavirus and the restrictions that Beijing is currently imposing on the Chinese economy.
Michael Hartnett, chief investment strategist at Bank of America, lamented the recession mode the markets are in. The US yield curve, measured by the difference between 5 and 30-year bonds, is at a one-year low; global stocks, with the exception of US tech stocks, would have trended unchanged over the past eight months; Emerging market stocks are in the red this year; Small-cap stocks were falling, and eventually a number of commodities were down double-digit percentages from their highs.
On the other hand, there were a number of positive surprises on the part of the company, which in individual cases were used to take profits. So it went for Applied Materials after record figures in the past quarter, earnings and sales fell by 1.5 percent. However, the stock of the supplier to the booming chip industry had risen almost 50 percent in the year to date.
Also according to the quarterly report, the price of the textile retailer fell Ross Stores by 2.7 percent. Ross increased earnings in the second quarter and again exceeded pre-pandemic levels. The situation was similar with sales. Signs of a slowdown in growth have recently come from the retail sector. Ross expects a like-for-like increase of five to seven percent for the third quarter.
Foot locker jumped 7.4 percent after quarterly figures. The sporting goods chain had clearly beaten expectations. Agricultural machinery producer Deere has also exceeded the forecasts and raised the targets. However, Deere CFO Ryan Campbell spoke of exacerbated supply chain problems that could drag on into next year. The share fell 2.1 percent.
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