The tech industry particularly benefits
Powell hearing lifts mood on Wall Street
March 7, 2024, 10:53 p.m
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It is still unclear when the Fed will cut the key interest rate. However, at a hearing before the US Congress, Federal Reserve Chairman Jerome Powell gave hope. A good sign for investors. Tech stocks in particular are increasing.
Fed Chairman Jerome Powell’s statements to the US Congress are creating a cheerful mood on Wall Street. The Dow Jones Index the standard values closed 0.3 percent higher on Thursday at 38,791 points. The tech-heavy Nasdaq advanced 1.5 percent to 16,273 points. The broad one S&P 500 gained one percent to a record close of 5157 points.
The chairman of the US Federal Reserve left the timing of easing monetary policy open in a hearing before the US Congress on Wednesday and Thursday. However, he emphasized that the monetary authorities have this important monetary policy change on their radar in 2024. “Powell’s statements were not particularly surprising,” commented James Knightley, chief economist at Dutch bank ING.
More data is needed to determine the exact time of the first interest rate cut. The Fed is trying to curb inflation with high interest rates and cool down the hot labor market. “However, we still believe the Fed could cut rates as early as June as long as jobs data is sufficiently weak by then,” Knightley said.
Investors were therefore eagerly awaiting the US government’s official labor market report on Friday. Despite the tightening of monetary policy, experts estimate that job growth will continue to be strong at 200,000. In January there were even 353,000. “The Fed says it no longer needs a significant labor market slowdown to lower interest rates,” said Chris Larkin, managing director of trading and investing at Morgan Stanley’s E*TRADE. “However, the market could still react euphorically if the data turns out to be surprisingly weak. Conversely, it also means that strong data could lead to a collapse on the stock markets.”
Study inspires pharmaceutical company
The expectation of long-term falling interest rates supported the shares of large technology companies such as Intel, Marvell, Micron and Nvidia, which advanced between 3.6 and 4.6 percent. Easing monetary policy makes the investments needed for their growth cheaper. Amgen, on the other hand, flew out of the depots. The US pharmaceutical company’s shares fell by 1.3 percent. The background was encouraging initial study results for the weight loss drug Amycretin from rival Novo Nordisk.
The company announced at a capital market day that participants in a phase 1 study with the weight loss tablet Amycretin had lost an average of 13 percent of their weight after twelve weeks. In comparison, the weight loss with the Wegovy weight loss injection was six percent after twelve weeks and 15 percent after 68 weeks. Investors took the news as an indication that Novo has more in the pipeline besides the highly successful Wegovy.