Wall Street celebrates the decision of a Fed less severe than feared


The Wall Street sign in New York (AFP/ANGELA WEISS)

The New York Stock Exchange paradoxically celebrated, concluding sharply higher, the increase in rates of half a percentage point announced by the American Central Bank (Fed) on Wednesday, because this excludes for the moment a more severe tightening.

According to final results at the close, the Dow Jones index climbed 2.81% to 34,061.06 points. The technology-dominated Nasdaq jumped 3.19% to 12,964.86 points while the S&P 500 rose 2.99% to 4,300.17 points.

“It’s a party on Wall Street, bond yields are falling. In the end, the Fed hasn’t been as hawkish as that,” commented Joe Manimbo of Western Union.

“This shows up in the fact that the Fed appears to be ruling out a 0.75 percentage point hike” in the future, the analyst noted.

Even if it endorsed an increase in key rates by 50 basis points as the markets expected – which represents a first for more than twenty years – the Monetary Committee (FOMC) seems more circumspect about the possibility of a more severe tightening of 75 basis points, which was feared by investors.

A rate hike of 0.75 percentage points “is not firmly on the cards,” Fed Chairman Jerome Powell told a news conference after the committee’s decision was released.

Overnight rates are therefore set at a level between 0.75% and 1% but other increases of a magnitude of 0.50% “are on the table for the next two meetings”, in June and July. , said Mr. Powell.

“That begs the question for September, we’ll have to see the data, if inflation moderates,” suggested the Western Union analyst.

The Fed’s balance sheet will also begin to shrink at the rate of $47.5 billion per month from June 1 and to $90 billion after three months, another way to raise the cost of credit to temper demand. and price increases.

Bond yields eased significantly, that on two-year bills falling to 2.63% against 2.78% the day before. The yield on ten-year Treasury bills fell to 2.92% instead of 3% earlier in the session.

The eleven S&P sectors finished high in the green, starting with energy (+4.11%), while crude prices jumped more than 5%, followed by communication services (+3, 68%) and information technology (+3.51%).

The Airbnb accommodation rental platform saw its title jump 7.71% to 156.18 dollars. It raised its sales forecast for the second quarter and managed to sharply reduce its loss in the first.

Starbucks climbed 9.83% to $81.64. The American coffee giant has managed to offset the sharp slowdown in its activity in China in the first quarter with a boost in the United States, where it wants to increase the development of “drive-in” points of sale, where customers are served in their vehicle.

The title of the manufacturer of the anti-Covid vaccine, Moderna, advanced 5.81% to 155.05 dollars. The laboratory announced a quarterly profit higher than expected with sales of 5.93 billion dollars for its anti-Covid vaccine, its only product.

Uber, the car rental company with driver and specialist in meal deliveries, lost 4.65% to 28.10 dollars despite a doubling of its turnover in the first quarter, helped by an increase in its prices. Uber is still losing money but is betting on continued growth in the second quarter.

The title was also dragged down by the fall in the action of its rival Lyft, which plunged 29.91% to 21.56 dollars. The group recorded a larger than expected loss in the 1st quarter and indicated that it had to invest more to boost its fleet of drivers.

© 2022 AFP

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