Wall Street on the up
Powell speech encourages US investors
02/01/2023, 11:12 p.m
The US Federal Reserve is raising interest rates by a moderate 0.25 points due to weakening inflation. This step and the subsequent press conference by Fed Chair Powell calmed tempers on Wall Street. The Nasdaq and the S&P 500 benefit from this.
US investors have drawn hope from the words of US Federal Reserve Chairman Jerome Powell on further interest rate policy. As expected, the Fed raised the key monetary rate by 0.25 percent during trading on Wall Street. The most important indices trended weaker immediately afterwards. However, they then increased during Powell’s press conference.
Analysts pointed out that Powell confirmed that inflation was falling. “He could have said that the markets were overly nervous and he didn’t take the opportunity to do so,” said Edward Jones investment strategist Angelo Kourkafas. Instead, Powell explained that a large amount of tightening had already taken place. the Dow Jones ended up stagnating at 34,093 points. The tech-heavy one Nasdaq however, advanced two percent to 11,816 points and the broader S&P 500 increased one percent to 4119 points.
Recent signals from the US labor market point to the Fed’s successes in the fight against inflation. According to data from the personnel service provider ADP, only 106,000 jobs were created in January. Experts had expected private sector jobs to rise by 178,000 after a revised 253,000 in December. “What you’re seeing here is an abrupt drop in hiring, which means the Fed is succeeding in what it set out to do – create elevated unemployment and reduce demand, which will effectively lower inflation.” said Thomas Hayes, chairman of investment firm Great Hill Capital.
the Euro was up 1.2 percent to $1.0986 by the close in the US. Expectations that the ECB will tighten interest rates more than the Fed this year gave the common currency a boost. The decision on the ECB’s next step is due on Thursday. Rising interest rates make investments in the euro zone more attractive for international investors. Inflation in the euro area fell more-than-expected to 8.5 percent in January, while the unemployment rate remained at 6.6 percent in December.
Brightened in the US chip sector AMD with a prospect of better business in the second half of the year. The papers closed 12.6 percent in the plus. Snapchat operator titles Snap on the other hand, collapsed by 10.3 percent after the first quarter saw the threat of a decline in sales for the first time. The biotech company amgen with its sales forecast for 2023 also fell short of the expectations of stockbrokers. Shares fell nearly 2.4 percent.
Investors also reacted with shock to a forecast reduction Electronic Arts. The US company plans to release some of its video games at a later date, which should have a negative impact on net bookings. Shares fell 9.2 percent. The energy sector came under pressure in the wake of falling oil prices. After US inventories swelled more than expected, the North Sea variety became cheaper Brent by 2.5 percent.