Reticence before the Fed vote
Wall Street is treading water
September 18, 2023, 10:35 p.m
Listen to article
This audio version was artificially generated. More info | Send feedback
At the start of the week, investors on Wall Street are staying safe. Nobody wants to end up on the wrong side before the Fed’s decision on Wednesday. Pharmaceutical stocks and tech stocks in particular have to give up.
Investors on Wall Street held back ahead of the US Federal Reserve’s interest rate decision on Wednesday. The Dow Jones Index the standard values stagnated at 34,624 points. The technology-heavy one Nasdaq recorded little change at 13,710 positions and the broad one S&P 500 increased 0.1 percent to 4,453 points.
“This week investors are fully focused on the Fed meeting, although there is almost unanimous consensus that key interest rates are still where they are today on Wednesday evening,” said Konstantin Oldenburger, analyst at broker CMC Markets. “The big question is not whether the Fed will raise interest rates again, but how long interest rates will stay where they are now.”
It remains unclear where monetary policy will go in the long term. “Fed Chairman Jerome Powell can trigger big moves in either direction with his comments, and you don’t want to be caught on the wrong side,” said Peter Tuz of asset manager Chase Investment Counsel. “The best strategy for the next few days is to wait and see what happens.”
Oil rally continues
The data situation on which the monetary authorities want to base their actions remains largely inconsistent. A series of better-than-expected economic data recently eased concerns about a possible recession without increasing fears of a rate hike in September. However, the recent sharp rise in energy prices threatens to drive up inflation, according to analysts. “Oil prices are also influencing the narrative right now and the Fed will take this into account,” said Peter Andersen, founder of Andersen Capital Management.
That’s how they stayed Oil prices The highest level in ten months due to supply concerns and speculation about a recovery in demand in China. Brent crude oil and US light oil WTI were slightly up at $94.00 and $90.98 per barrel, respectively. The drivers are China’s economic policy, robust economic data from the USA and the ongoing OPEC+ production cuts, said Tina Teng, analyst at broker CMC Markets.
“This rise in oil prices is slowing down the economy in several ways,” stated Thomas Altmann from asset manager QC Partners. “On the one hand, direct energy costs are becoming more expensive again. On the other hand, higher oil prices are leading to higher inflation rates, which in turn result in higher interest rates and thus higher financing costs.”
Tech stocks on the decline
When it comes to individual stocks, pharmaceutical companies came under the radar. Moderna, Novavax and Pfizer lost between 1.3 and 8.7 percent. Pfizer CFO David Denton expects a corona vaccination rate of 24 percent in the USA this year.
The chip designer’s shares also flew out of the depots poor. The titles lost almost eight percent after a downgrade. The experts at the Munich private bank Bernstein have classified the stocks traded since Thursday as “underperform”.
Other tech stocks went on a rollercoaster ride. Microsoft, Nvidia, Broadcom, Marvell and Lam Research, which were initially significantly in the red, turned positive and gained up to around 1.5 percent. According to experts, higher interest rates reduce future profits for these high-growth companies.