Smaller rate hikes expected
Wall Street continues uptrend
08/15/2022 11:24 p.m
Wall Street continues its upward trend at the beginning of the week. Weak economic data are raising hopes that the US Federal Reserve may tighten interest rates less than feared. Papers from Chinese companies such as Alibaba and Baidu are coming under pressure.
Confidence gained the upper hand on Wall Street on Monday after initial disappointment with economic data from China and pushed stock prices further higher. Of the Dow Jones Index the standard was up 0.4 percent on Monday at 33,904 points, the broader S&P 500 gained 0.7 percent to 4297 points. The index of the technology exchange Nasdaq rose by 0.6 percent to 13,124 points.
Bad news is shrugged off, said Michael James of Wedbush Securities. Portfolio manager at Kingsview Investment Management, Paul Nolte, attributed the positive development to monetary policy expectations. Market participants expected that the Fed would not raise interest rates as much as feared. And from their point of view, that will be good for the stock market.
Easing price pressures in the US last week fueled speculation that the US Federal Reserve might slow the pace of the rate hike cycle and boosted stock prices. High growth company stocks benefited from lower US Treasury yields. The papers from Apple and Microsoft advanced between 0.5 and 0.6 percent.
On the economic side, the Empire State Manufacturing Index slipped to minus 31.3 points in August. A plus of 5.0 points had been expected in advance. “The US Empire data has been abysmal and has reminded the Fed to be extra cautious with their monetary policy as the US economy has put on an emergency brake,” said Naeem Aslam, market analyst at brokerage firm AvaTrade.
China’s central bank is braving itself against the economic slowdown in the wake of the Corona crisis with the surprising reduction in important interest rates. Both retail sales and industrial production fell short of expectations in the People’s Republic in July. “These are further signs that growth momentum is declining rapidly after the Shanghai lockdown,” said Alvin Tan, strategist at finance house RBC. “Monetary policy is losing traction, apart possibly from the exchange rate, with exports being the only bright spot in the economy.”
In terms of individual stocks, US-listed shares of the Chinese e-commerce giant fell Alibaba and the internet company baidu negative pressure. The titles each fell by around 0.6 percent.
Meanwhile, analysts have been optimistic that the move to delist five Chinese state-owned companies from the New York Stock Exchange could pave the way for Beijing to reach an audit deal with the United States, ending a dispute more than a decade old.