Interest rate expectations lift Wall Street into positive territory
The rally on the US stock market continues at the start of the week. The next Fed meeting next Wednesday is eagerly awaited. Although investors are already assuming that a pause in interest rates will be announced, what is much more interesting is what the Fed plans to do in 2024.
The good run on the US stock market continued on Monday. Irrespective of the central bank decisions on both sides of the Atlantic, which are due later in the week, the Dow Jones Industrial surpassed the 36,400 point mark. It thus reached a new high since the beginning of last year, as did the Nasdaq 100. Ultimately, Wall Street's best-known index, the Dow, ended the day up 0.43% at 36,404.93 points. The impressive rally since the end of October thus continued, albeit at a slightly slower pace.
The broad market S&P 500 gained 0.39% to 4622.44 points. The technology-heavy Nasdaq 100 rose by 0.85% to 16,221.74 points. The recent upward movement was driven by the expectation that the central banks have made sufficient progress in their struggle with high inflation and could therefore lower key interest rates early next year. The US Federal Reserve will announce its interest rate decisions in Washington on Wednesday evening.
The monetary authorities have raised key interest rates significantly since the beginning of 2022 in the fight against inflation. Most recently, they have kept their feet still so as not to put too much pressure on the economy. The financial markets are also expecting a pause in interest rates on Wednesday. "More important for the market are the indications of where Fed policymakers see interest rates next year," said Neil Wilson, chief analyst at broker Finalto. "Investors are anticipating big rate cuts in 2024, but so far the Fed folks haven't bought into those ideas. The December meeting would be the right time to change the tone and move closer to market forecasts."
Prospect of takeover boosts Macy's
The dollar index rose by 0.1 percent to 104.07 points. The euro remained little changed at 1.0763 dollars. Gold slipped below the 2000 dollar mark and fell 1.1 percent to 1981 dollars per troy ounce. Investors on the oil market initially put fears of weakening demand behind them. Following the announcement by the US Department of Energy to replenish strategic oil reserves, prices for North Sea Brent crude and light US WTI crude were slightly higher at USD 76.12 and USD 71.42 per barrel (159 liters) respectively.
Among individual stocks, the prospect of a billion-dollar takeover drove Macy's higher. Shares in the US department store chain jumped 19.4 percent to 20.77 dollars after Reuters reported a takeover bid of 5.8 billion dollars. US rivals Kohl's and Nordstrom each rose by around seven percent. Cigna was also in demand, with its share price jumping 16.7 percent. According to insiders, the US health insurer has abandoned its plans for a billion-euro takeover of rival Humana.
A 7.9 percent drop in the price of Bitcoin, on the other hand, depressed the shares of cryptocurrency specialists such as Coinbase and Marathon Digital, which lost between 5.9 and 12.6 percent. Tesla also fell. The shares of the e-car manufacturer lost 1.7 percent. A group of Scandinavian pension funds took the side of the employees in the power struggle between the Swedish trade union IF Metall and Tesla.
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The anticipation of a potential pause in interest rate hikes by the Fed during their upcoming meeting on Wednesday has positively influenced the US stock market, with the Dow Jones Industrial surpassing 36,400 points. This is in line with prevailing expectations of lower interest rates in 2023, although the Fed's plans for 2024 remain unclear, causing some debate among analysts like Neil Wilson from broker Finalto.
Meanwhile, Macy's stock price saw a significant boost of 19.4% following rumors of a potential billion-dollar takeover bid. This positivity in the stock market reflects investor confidence, despite the uncertain interest rate decisions by the Federal Reserve and other central banks.
The ongoing expectations about interest rate decisions by financial institutions such as the Fed have also impacted the sheet music banks, potentially influencing their lending terms and interest rates, consequently affecting various market sectors.
Source: www.ntv.de
