Financial markets are on edge, anticipating the Federal Reserve's impending decision.
Before the Federal Reserve's interest rate vote, American investors are taking a pause. While an interest rate hike appears imminent, the magnitude of the rise is causing a stir on Wall Street.
US stock markets concluded transactions with little variation in the evening. The Dow Jones Index dropped 16 points to settle at 41,606 points. The S&P-500 also traded close to even, while the Nasdaq Composite showed a 0.2% growth. A total of 1,684 (originally 1,987) stocks ended in the green, while 1,122 (originally 814) ended in the red. Around 60 (originally 79) stocks concluded at the same level. Investors remained apprehensive before the Federal Reserve's interest rate decision on Wednesday. It's now widely recognized that the Fed will lower interest rates to bolster the US economy. However, the question remains – will it be a 25-basis-point or a 50-basis-point reduction? Currently, a small reduction is projected at 35%, while a large one is forecast at 65%.
The latest economic data, however, suggest a robust US economy, indicating a potential small reduction. The highly scrutinized retail sales index inched up 0.1% in August compared to the previous month, contrary to the anticipated drop of 0.2%. Industrial production increased by 0.8% in August, surpassing forecasted monthly growth of 0.2%. Capacity utilization also surpassed expectations. However, inventories rose 0.4% in July, contrary to predictions of a 0.3% increase.
Intel and Microsoft's gains
Intel saw a 2.7% surge among individual stocks. The chipmaker reported a significant order from Amazon's cloud division, with CEO Pat Gelsinger announcing the deal. Intel also announced cost-cutting measures totaling $10 billion. As part of these measures, the construction of chip factories in Germany and Poland will be delayed by two years. However, critics note that while Intel is trimming costs, they question how the company will regain growth and market share.
JPMorgan Chase (+0.7%) is in talks with Apple (+0.2%) to acquire Apple's credit card program. The discussions began earlier this year and have since progressed, but a deal could still take several months, according to insiders. Microsoft saw a 0.9% rise. The company plans to repurchase its own shares to the tune of $60 billion. Shareholders can anticipate a larger dividend. Philip Morris stumbled, dropping 2.2%. The tobacco company expects a loss of $220 million from the sale of its inhalation therapy business to Molex Asia Holdings. Post a profit warning for the third quarter, the stock of steel company Nucor fell 0.5%.
Dollar marginally stronger - Oil prices escalate
On the foreign exchange market, the dollar showed minor strength. The dollar index climbed 0.2%. Focus was also on the Federal Reserve's interest rate decision in this segment. On the bond market, yields experienced a slight increase with the new economic data. The yield on 10-year papers rose 2.4 basis points to 3.64%.
Oil prices continued their recovery post the previous day's surge. Prices for WTI and Brent crude increased by up to 1.7%, buoyed by positive economic data, production disruptions in the Gulf of Mexico due to Hurricane Francine, and a substantial decrease in Libyan oil exports. Gold prices fell with rising market interest rates and a stronger dollar. The price for the troy ounce dropped by 0.5%.
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Wall Street analysts are closely monitoring the potential impact of the Federal Reserve's interest rate decision on US stocks. Despite the robust US economy indicators, investors remain cautious, with the Dow Jones Index dropping 16 points and the Nasdaq Composite showing a 0.2% growth on Wall Street.
The upcoming Federal Reserve meeting is causing a stir on Wall Street, as investors are unsure whether the interest rate reduction will be a 25-basis-point or a 50-basis-point reduction, which could significantly influence the performance of various stocks on Wall Street.
