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Wall Street: Investors dream of a gesture from the Fed


(CercleFinance.com) – Wall Street manages to limit its losses on Thursday morning, supported by hopes of an action by the Fed which would make it possible to attenuate the consequences of the war in Ukraine on the markets.

At the end of the morning, the Dow Jones fell 2.2% to 32,413.2 points, while the Nasdaq Composite fell 1.1% to 12,889.3 points, while the ‘futures’ were preparing for good scores. heavier.

The prospect of a possible intervention by the Federal Reserve allows investors to regain some confidence after the bad series they have been going through since the beginning of the year.

The S&P 500 – the benchmark index for American managers – entered the correction zone this week, confirming a decline of more than 10% compared to its highs for the year 2021.

Some economists, however, point out that since Alan Greenspan took office in 1987, the Fed no longer hesitates to take measures with the explicit objective of reviving the markets.

‘During Jerome Powell’s first term as Fed Chairman from 2018, the stock market suffered two corrections and the Fed changed its plans each time by reversing plans for rate hikes in early 2019 and then by easing its policy in the spring of 2020,” recalls Nicholas Farr, economist at Capital Economics.

For many strategists, the Russian intervention in Ukraine is in fact akin to a ‘black swan’, namely an external, unforeseen and major shock requiring, by definition, an exceptional response.

The markets also seem to be betting on a conflict of limited duration, which would last only until the installation in Kiev of a government favorable to Russia.

As a result, the CBOE’s VIX index – which measures market volatility and acts as a ‘fear barometer’ – is slowing down a bit after hitting levels not seen in almost two years in the early morning.

The surge in tensions in Ukraine, on the other hand, is contributing to the rise in oil prices, with the price of a barrel of American light crude (West Texas Intermediate, WTI) rising another 4% to 97.4 dollars.

Some good statistics had helped to support the morale of the financial markets at the start of the day, even if their effect was long-lasting given the geopolitical context.

On the macroeconomic front, GDP growth in the United States was revised to +7% in the fourth quarter, according to a second estimate from the Commerce Department which had announced 6.9% in the very first reading.

The number of weekly registrations for unemployment benefits for its part fell during the week of February 14 in the United States to settle at 232,000, against 249,000 a week earlier.

At the sector level, financial stocks (-2.9%) and consumer-related stocks (-2.6%) suffered the most massive sell-offs this morning.

Conversely, the defensive sectors of telecoms (-0.4%) and utilities (-0.7%) managed to post limited declines.

Also note the good performance of defense stocks, such as Lockheed Martin (-0.5%) or Raytheon (-0.5%), which are benefiting from the prospect of increased military spending in a global geopolitical context wrought up.

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