Waiting for Fed decision
US stock markets are only slowly groping their way forward
05/03/2022 10:27 p.m
Wall Street is recovering only slightly. The reason: US investors are cautious and are eagerly awaiting the Fed’s interest rate decision on Wednesday. The US cosmetics group Estee Lauder was one of the losers of the day.
The US stock market struggled to stay on course for recovery on Tuesday. The most important indices saved themselves after another nervous trading in the plus. Some tailwind for Wall Street came from fresh economic data. US industrial orders rose more than expected in March. Some relief was also provided by the fact that the recent rise in yields in the bond market has paused. Higher interest rates paint stocks in a worse light compared to bonds.
The leading index Dow Jones Industrial rose 0.20 percent 33,128.79 points. For the broad market S&P 500 it went up 0.48 percent 4175.48 counts up. The tech-heavy one Nasdaq 100which fell to its lowest level in more than a year on Monday, rose 0.11 percent 13,089.90 points to.
In addition to mixed company balance sheets, the central bank meeting in particular cast its shadow. It is considered agreed on the stock exchanges that the Fed will raise interest rates by half a percentage point on Wednesday. “Looking ahead might be more important than what they’re going to do,” said investment expert Randy Hare of Huntington National Bank.
“The Fed is in a position where they are lagging behind on inflation, so unless things are slowing down they need to be more aggressive.” Investors are currently wondering which factor will have the upper hand: inflation, recession or stagflation, said investment strategist Michael Hewson of brokerage house CMC Markets. Experts use stagflation to describe a stagnating economy with rising inflation at the same time.
Against this background, government bonds flew out of the depots. the ten-year US bonds returned as at the beginning of the week at up to 3.01 percent, the highest level in three and a half years. “The US Federal Reserve is poised to begin aggressive rate hikes as China and the EU slow down,” said Stephen Innes, managing director at asset manager SPI. Rising bond yields made bank stocks more attractive to investors.
The shares of the financial houses JP Morgan and Goldman Sachs rose up to 2.1 percent. In the commodities sector, investors were particularly worried about the corona lockdowns in China. Fear of falling demand from the world’s largest customer pushed down the price of the crude oil variety Brent from the North Sea by 2.3 percent to $105.40 per barrel (159 liters) and for copper by more than three percent to $9421 per ton.
At the losers stabbed Estee Lauder with a minus of around 5.8 percent. The US cosmetics group is burdened by the Ukraine war and the Covid 19 restrictions in China and is conceding its annual targets. The manufacturer of MAC lipsticks and Bobbi Brown foundations expects sales to increase by seven to nine percent in 2022 instead of 13 to 16 percent. Speculations on the spin-off of parts of the company fueled Western Digital’s share price by more than fourteen percent. Activist investor Elliott Investment Management is pushing the storage solutions group to strategically realign.