Powell curbs interest rate hopes
Dow closes higher, Nasdaq loses
April 16, 2024, 11:00 p.m
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US Federal Reserve Chairman Powell is further dampening the market’s expectations of imminent interest rate cuts. However, the interest rate concerns of US traders are offset by some encouraging quarterly results. In the end, Wall Street ends the trading day with a mixed trend.
The US stock exchanges did not find a common direction on Tuesday. Strong financial results from major US banks and other important companies supported Wall Street. However, Fed Chairman Jerome Powell dampened interest rate cut fantasies. The Dow Jones Index the standard values closed 0.2 percent higher at 37,798 points. The technology-heavy one Nasdaq However, it fell 0.1 percent to 15,865 points. The broad one S&P 500 lost 0.2 percent to 5051 points.
The major US bank Morgan Stanley earned more at the start of the year thanks to increasing business in investment banking. The shares of Morgan Stanley advanced by 2.5 percent. The health insurer’s papers were also in demand United Health. Despite the burden of a cyber attack in February, the company impressed investors with surprisingly strong results at the start of the year. The titles climbed by 5.2 percent.
“The reports this morning were good,” said Rick Meckler, partner at Cherry Lane Investments. “Furthermore, the market is looking for new reasons to buy stocks after its recent sell-off. Investors are now moving past hopes of imminent interest rate cuts and are choosing individual stocks based on strong numbers rather than investing in entire indices.”
The share of Bank of New York Mellon reduced its initial gains according to figures and exited trading around two percent lower. The financial institution presented a surprisingly large profit for the first quarter. However, the outlook disappointed investors. Bank of New York Mellon reiterated its forecast for a ten percent decline in net interest income (NII) in the current year compared to 2023. Analysts on average had expected a decline of 8.4 percent. In addition, according to CFO Dermot McDonogh, the bank has “more work to do to save enough money.”
No interest rate cut in sight
Interest rate and Middle East concerns also weighed on sentiment. It remains unclear how Israel will respond to Iran’s latest attack. A wildfire in the Middle East could cause oil prices and thus inflation to explode again, commented analyst Konstantin Oldenburger from broker CMC Markets. This is likely to further delay the US Federal Reserve’s long-awaited monetary policy easing. The monetary authorities are trying to keep the high rate of inflation in check with increased interest rates without strangling the economy.
In view of the stubborn inflation in the USA, the central bank signaled that it would remain tight and is putting off the interest rate turnaround. The latest inflation data is not suitable to give the monetary authorities more confidence with a view to a sustained decline in price pressure towards the target of an inflation rate of two percent, said central bank chief Jerome Powell. Rather, the numbers signaled that it would likely take longer to achieve that confidence. Given the situation on the inflation front and the still strong labor market, it is currently appropriate to let the tight monetary policy continue to have an effect.
The prices for North Sea crude oil Brent and the light US variety WTI were more or less stable at 89.99 and 85.33 dollars per barrel (159 liters). However, they have increased by around 20 percent since the beginning of 2024. “It seems clear to everyone that an oil price above $100 is likely to leave its mark on the economy and the stock market,” said Oldenburger.