Anticipation of higher interest rates lifts Wall Street stocks.
Prior to the anticipated release of the latest inflation figures, a sense of optimism regarding potential future interest rate reductions is growing on Wall Street. US indices are on the rise, with some even seeing substantial gains. Meme stocks like GameStop and AMC Entertainment are once again garnering significant attention.
On the day before the highly anticipated consumer price data, the US stock markets experienced a surge. The Dow Jones index of blue chips moved 0.3% higher to close at 39,558 points. The broader S&P 500 saw a 0.5% increase to 5,246 points, while the Nasdaq technology index enjoyed a 0.75% rise to 16,511 points.
For months, the markets have been anticipating when the Federal Reserve will enact monetary easing measures. Should inflation be higher than anticipated, the planned rate cut in September could potentially cause wavering confidence. Investors are eagerly awaiting tomorrow's US consumer price data for April as it may dictate when the first interest rate cut might take place. Analyst Christian Henke from broker IG urged caution: "There's a lot of hope for a rate cut in September, but inflation also needs to cooperate."
Despite Federal Reserve Chairman Jerome Powell's repeated statements, markets are hoping for a rate cut in September. However, Powell's confidence in this decrease has wavered due to the unexpectedly strong price surge in the first quarter. Powell commented on this during a visit to Amsterdam. He reaffirmed previous claims that the Fed would be patient and allow the current key interest rate to have its intended impact on the economy. The Fed had not anticipated such a bumpy road towards achieving their goals.
The Fed is attempting to utilize tight monetary policy to bring core inflation down from its current rate of 3.8% to their target of 2%. Most investors are currently expecting the Fed to not initiate the interest rate reversal until the fourth quarter of 2024.
Among individual stocks, the aforementioned meme stocks GameStop and AMC Entertainment were once again the subject of gambling. GameStop's share price rose by 60%, while AMC's increased by 32%. Both stocks continued to see gains from Monday. Investors were reminded of 2021—a year in which numerous private speculators drove share prices up dramatically, regardless of any fundamental data.
Meanwhile, shares in Swiss sports footwear manufacturer On soared by 18.3% after a forecast increase. Newly formed brands like On and Hoka, owned by Deckers Outdoor, have managed to lure customers away from more established companies like Nike through their innovative designs. Deckers' shares also gained 3.7% following On's announcement.
On the flip side, shares in Chinese online retailer Alibaba fell by 6%. Profit declines resulting from the value of investments impacted Alibaba, leading to losses.
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In light of speculations about future interest rate hikes, share traders are closely watching the Fed's actions. If the Fed increases rates as expected, it could potentially impact share prices on the Dow Jones, affecting blue-chip companies.
Amidst the ongoing discussion about interest rates, some investors are still eagerly participating in share trading activities on platforms like Robinhood, focusing on stocks like GameStop and AMC Entertainment.
Source: www.ntv.de
