Friday October 22, 2021
“Time to cut back on purchases”
Powell’s speech puts a damper on the stock market
Statements by Federal Reserve Chairman Powell about the exit from the loose monetary policy curb the buying mood on Wall Street. Occasionally, however, encouraging company balance sheets lift the mood – especially the stumbling property giant Evergrande provides relief.
Hawkish remarks by the US Federal Reserve governor have slowed Wall Street after it had previously benefited from the predominantly positive balance sheet season to date. Fed chairman Jerome Powell admitted the risk of higher inflation. It is time to cut back on monthly bond purchases, but it is still too early to raise interest rates, said the Fed chief via webcast during a panel discussion on the BIS-SARB Centenary Conference.
The technology-heavy Nasdaq then slipped deeper into the red. The Dow and S & P-500 had reached new all-time highs shortly after the starting bell, but could not hold them. The willingness to buy also declined because of the upcoming weekend. Of the Dow Jones Index rose by 0.2 percent. Of the S&P 500 fell 0.1 percent. Of the Nasdaq composite lost 0.8 percent.
The ailing Chinese real estate giant provided some relief Evergrande a bankruptcy – for the time being – averted. The corporation made an overdue interest payment of $ 83.5 million. A default on these bonds would have likely turned into the largest corporate bankruptcy in Asia, arguably with a global impact. But this shouldn’t be more than a breath of fresh air in the drama, warned traders.
Trump’s special purpose vehicle continues to rise
It was also noted positively that US President Joe Biden sees difficulties in raising corporate taxes. The US purchasing managers’ indices provided hardly any impetus. The Nasdaq was burdened by the drop in prices at Snap (-26.6%) and Intel (-11.7%). Snap expects growth to slow down following recent changes to Apple’s data protection rules.
Facebook shares decreased by 5 percent, Twitter at 4.8 and alphabet by 3 percent. Intel earned more than expected in the third quarter and also raised the sales forecast for the current financial year. However, the chip manufacturer cannot meet customer demand quickly enough, which is why sales in the third quarter just missed market expectations and will probably not reach them in the current fourth quarter either.
Outside of technology, the credit card company took off American Express by 5.4 percent. The company increased its sales and profits in the third quarter and benefited from its customers’ willingness to spend, especially in the restaurants. Honeywell lost 3.2 percent.
The course of the special purpose vehicle (Spac) used by ex-President Donald Trump Digital World Acquisition shot up by a further 107 percent after the price jump of 357 percent from Thursday. Trump announced the founding of his Trump Media & Technology Group (TMTG) on Wednesday, which will, among other things, launch an online platform called Truth Social. To go public, TMTG is to merge with Digital World.