The Federal Reserve temporarily dampens exuberance on Wall Street.
Surprisingly good inflation rates had a strong impact on the US stock market, causing it to reach new heights on "Super Wednesday." However, the mood shifted significantly during the evening: The US Federal Reserve put an end to the hope for a series of rate cuts this year.
Driven by the hope of rate cuts, Wall Street hit new records on "Super Wednesday." However, the indices closed close to their lows due to hawkish statements from the Fed. The Dow Jones Index decreased 0.1% to 38,712 points, partly due to Nike's performance. The S&P 500 and Nasdaq Composite dropped 0.9% and 1.5% respectively. Preliminary data showed that there were 2,033 (Tuesday: 1,018) winners and 803 (1,802) losers on the NYSE. The broad S&P 500 and the technology-heavy Nasdaq Indices set new records. Interest rate-sensitive technology and semiconductor stocks were in high demand, with sector indices in the S&P leading by 2.5% and 3.0%.
On a day when US inflation data and the results of the US central bank's meeting were available, investors focused on US consumer prices, which brought positive news to stock market investors. The anticipated price data came in lower than expected - even in the core rate. "The consumer price index was better than expected, down a tenth in all categories," said bond strategist Andrew Brenner of NatAlliance Securities. Markets had priced in a 50% chance of a US interest rate cut in September, but after the data, it rose to 73%. However, the interest rate cut hopes with the Fed faded slightly in the evening. The US central bank vowed only one more interest rate cut this year. This indicates that most members of the board are not in a hurry to lower interest rates. "Inflation is still too high," explained Fed Chairman Jerome Powell at his press conference. However, the fact that the central bank confirmed its key interest rate was no surprise.
The notes with the price data saw a large increase at the bond market and put pressure on yields. Falling market interest rates and the speculation of imminent interest rate cuts caused the dollar's value to fall 0.5% in the Dollar Index. With the Fed, yields and the greenback recovered from the day's lows.
With interest rate cut speculation, gold saw an increase in demand, with the price of the precious metal rising 0.2% below its daily high. Gold benefited from falling market interest rates and also as an inflation hedge. ECB Vice President Luis de Guindos warned that the inflation development of the next few months would "be difficult." However, with the Fed's statements, the gold price was no longer under the influence of these concerns.
Oil prices continued to rise. Even an unexpected increase in US crude oil inventories only moderately curbed the price increase. In the market, a sustained high demand for oil was expected, as the EIA raised its forecast for global oil consumption in 2024, and the OPEC cartel confirmed its optimistic expectations for demand.
Among the individual stocks, Oracle jumped by 13.2%. The software company announced new AI agreements with Google, Microsoft, and OpenAI and pushed weaker-than-expected quarterly results into the background.
Apple also saw an increase of 2.9% and surpassed its all-time high, pushing Microsoft to become the world's most valuable stock market company once again. The reasons for the rise were the announcement of Apple's new AI strategy, coupled with positive analyst opinions. However, the falling interest rates also played a part.
Nike was one of the weakest Dow stocks with a decline of 2.3%. The US sports equipment manufacturer suffered a setback in its efforts to protect the capitalized version of the word "Footware" as a brand for technology-related products. The European Union's court rejected Nike's trademark application and sided with German rival Puma. The European Union also ordered Nike to pay legal fees.
FedEx lost 1.5%. The package logistics company plans to lay off up to 2,000 employees in Europe. Amazon dropped 0.2%. The online retailer plans to invest billions of dollars in Taiwan over the next 15 years to build data centers. Casey's General Stores posted quarterly results below expectations and forecasted annual growth for a closely watched sales figure. The stock price rose by 16.7%.
For more information on today's stock market developments, see here. [T1]
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Despite the Fed's announcement of only one more interest rate cut this year, technology and semiconductor stocks remained in high demand due to their interest rate sensitivity, with sector indices in the S&P 500 leading by 2.5% and 3.0%. However, the Dow Jones Index was influenced by the Fed's hawkish stance, decreasing 0.1% to 38,712 points on the day.
The interest rate turnaround, prompted by better-than-expected inflation rates and the Fed's statements, led to a shift in investor sentiment towards the stock market, causing the Dow Jones to move away from its initial record-breaking trajectory.
