Dow sets new record - Nasdaq weakens
On Wednesday, the head of the US Federal Reserve clearly hints at interest rate cuts in the coming year for the first time - triggering "the strongest buying wave of the entire year". However, experts see clear signs of overheating - and urgently warn of a possible market correction.
The prospect of a turnaround in interest rates in the new year drove the Dow Jones Industrial to another high on Thursday. At times, it climbed just below the 37,300 point mark. The Nasdaq 100 and the S&P 500 are now not far off a record high either.
The Dow Jones, Wall Street's best-known index, ended the day up 0.43% at 37,248.35 points. The broad market S&P 500 gained 0.26 percent to 4719.55 points. The Nasdaq 100, which is predominantly made up of technology stocks, turned negative after a friendly start and ultimately fell by 0.15 percent to 16,537.83 points.
The previous day, the US Federal Reserve had boosted the markets by giving clear signals for interest rate cuts in 2024. Jerome Powell had "triggered the strongest buying wave of the entire year" on Wall Street, CMC Markets commented on the Fed President's statement on Wednesday. After Powell did not mention the word interest rate cut just two weeks ago, three steps down by 0.25 percentage points each for 2024 have now been hinted at.
Euphoria is waning
Nevertheless, the euphoria among Wall Street investors following the Fed's interest rate decision is waning. According to analysts, the longer the record chase continues, the greater the risk of a setback on the stock market. One indicator of this is the "Fear & Greed Index" from CNN Business, said Christian Henke from broker IG. This is designed to measure the emotions of investors on the stock market. The index is in the "Greed Sector", shortly before entering the "Extreme Greed" market state, explained Henke. "This means there are increasing warning signs of overheating on Wall Street." If the index continues to rise, investors should expect an imminent correction.
On the commodities market, investors were particularly keen on oil. North Sea oil Brent and US oil WTI rose by 3.3 percent to 76.72 and 71.71 dollars per barrel respectively. In contrast, the US currency fell. The dollar index fell by 0.9 percent to 101.95 points. The euro, on the other hand, rose 1.1 percent to 1.0989 dollars.
Cancer study drives Moderna
Among the individual stocks, Adobe came under pressure. Shares in the software developer fell by 6.3 per cent following a disappointing forecast. The company expects sales of between 21.30 and 21.50 billion euros in 2024; LSEG experts had assumed an average of 21.73 billion euros.
In contrast, shares in the biotech company Moderna were in demand, jumping 9.2 percent following positive study results for a cancer vaccine. Tesla shares rose by 4.9 percent on heavy volume.
Meanwhile, an upgrade boosted Foot Locker. The shares of the sports shoe retailer jumped almost 10 percent. The experts at broker Piper Sandler had upgraded them to "overweight" from "neutral". The target price was also raised to 33 from 24 dollars. One of the reasons for this was Foot Locker's partnership with the professional basketball league NBA.
A further increase in the stake by the investment firm of stock market guru Warren Buffett boosted Occidental Petroleum shares. The US oil company's shares rose by 2.6 percent. According to a mandatory disclosure, Berkshire Hathaway bought almost 10.5 million Occidental shares this week for a total of around 588.7 million dollars, increasing its stake to around 27 percent. Berkshire has been a regular buyer of Occidental shares since the start of the Ukraine war and the subsequent rise in oil prices. However, it has stated that it has no intention of taking over the company.
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- Elon Musk's Tesla Motors also saw a rise in its shares, gaining 4.9%, contributing to the overall market uptrend.
- The Federal Reserve Chair Jerome Powell's hints at potential interest rate cuts in 2024 have sparked interest in the Japanese yen, leading to a decrease in the US dollar index by 0.9%.
- One of the technology stocks affected by this market trend is Adobe, whose shares experienced a 6.3% decline following a less-than-satisfactory revenue forecast for 2024.
- Moderna, a biotech company, experienced a 9.2% increase in its shares thanks to positive results from a cancer vaccine study.
- With Warren Buffett's Berkshire Hathaway increasing its stake in Occidental Petroleum by almost 27%, the oil company's shares surged by 2.6%. This move adds to the growing interest in the energy sector, as oil prices continue to rise.
Source: www.ntv.de
