Wall Street slips into the red
Fed Chairman Powell is causing new fears about interest rates
November 9, 2023, 10:53 p.m
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Fear has the US investors under control again. The highest monetary watchdog has disappointed hopes that the Fed has already reached its interest rate peak with a clear line: If necessary, monetary policy will be tightened further, says Powell.
Wall Street closed for trading in the evening. The stock exchanges were impacted by market interest rates rising again. The Dow Jones Index closed 0.6 percent lower at 33,892 points. For the S&P 500 it fell by 0.8 percent. The Nasdaq Composite quoted 0.9 percent lower. There were a total of 742 (Wednesday: 1200) price winners and 2143 (1649) losers. 43 (106) titles closed unchanged.
The focus was on statements by US Federal Reserve Chairman Jerome Powell at a panel discussion at the International Monetary Fund. Powell said future progress in fighting inflation may have to come from limiting demand. While the Federal Reserve is satisfied with its success so far in easing price pressures, it is not sure whether interest rates are high enough to reduce inflation to the 2 percent target in the long term. The Fed will not hesitate to raise interest rates further if necessary, said the Fed President. Nevertheless, the Fed will exercise caution in its future decisions because the US central bank neither wants to be misled by a few good months of data nor does it want to run the risk of over-tightening.
At the Bond market Yields increased significantly again in the run-up to Powell’s speech and rose a little afterwards. A $24 billion auction of 30-year debt was met with weaker-than-expected demand. The yield on 30-year bonds increased by 16.0 basis points to 4.78 percent, while on 10-year bonds it rose by 13.8 basis points to 4.63 percent. The day before, the new issue of ten-year government bonds with a volume of $40 billion was relatively well received. In terms of economic data, only initial jobless claims from the previous week were published. These were slightly lower than expected.
Cost cutting at Disney is well received
The business figures of Walt Disney contained light and shadow, but the entertainment company is making faster progress in cost reductions than expected. The share rose by 6.9 percent. Tapestry rose by 3.0 percent. The parent company of the leather accessories and shoe brands Coach, Kate Spade and Stuart Weitzman missed expectations with sales in the first quarter and gave a rather pessimistic outlook. However, the fact that Tapestry was able to implement price increases was positively received. The gross margin was also convincing.
The donut chain Krispy Kreme is sticking to its outlook despite weak sales and earnings figures in the third quarter. Nevertheless, the share price fell by 6.6 percent. Beyond Meat recorded a surprisingly significant decline in sales in the third quarter because demand for plant-based meat substitutes fell. Nevertheless, the company managed to reduce its loss more than analysts expected. The stock advanced 2.4 percent. The course of Bloom Energy jumped 8.4 percent. The alternative energy provider exceeded market expectations with sales and earnings in the third quarter.