US investors are reassured by panic sales
The storm clouds of the stock market turmoil have dispersed. Calm returns at the end of an eventful week. Likely due to prospects of a loosening of the Fed's monetary policy. Shares of the online booking portal Expedia are particularly sought after. Despite the weak outlook.
Reassuring words from a leading US central banker pushed the Wall Street to the weekly close. The Dow Jones index closed 0.1 percent higher at 39,497 points. The tech-heavy Nasdaq advanced 0.5 percent to 16,745 points. The broad-based S&P 500 improved by 0.5 percent to 5,344 points.
"Investors are currently extremely sensitive to all US labor market figures," said analyst Charalambos Pissouros from brokerage house XM. The panic selling after the weak employment numbers of the previous week and the relief over the initial claims on Thursday showed this clearly. Therefore, strong economic data is good for the stock markets for the time being, even if this means that the Fed will not lower interest rates as much as hoped.
That the Fed will ease its monetary policy in September is considered a done deal. Market participants interpreted the latest statements of US central banker Jeff Schmid as confirmation of this. The chief of the Federal Reserve Bank of Kansas City, known as an advocate of a more restrictive monetary policy, had expressed himself positively about the development of the economy and inflation and had hinted at an adjustment of monetary policy. Currently, about half of the investors expect a quarter-point interest rate cut, the rest expect a half-point cut.
Expedia sought after despite weak outlook
Shares of Expedia were sought after, gaining more than ten percent. The online booking portal had delivered a surprisingly strong quarterly result, but had presented overall annual targets below market expectations. Apparently, investors saw this outlook as conservative, said analyst Thomas Champion from investment bank Piper Sandler. Other analysts pointed to the low expectations after the disappointing numbers of rivals AirBnB and Booking.com.
The shares of Paramount Global were also in demand, with a gain of around one percent. After the US media conglomerate Warner Bros Discovery, the rival Paramount Global is also taking billion-dollar write-offs on its TV channels. In addition, Paramount announced the elimination of 15 percent of its jobs, which corresponds to about 3,200 positions.
On the other hand, shares of Eleven Beauty plummeted by more than 14 percent after the cosmetics manufacturer disappointed the markets with its earnings and revenue outlook.
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Wall Street's recovery was further boosted by the positive outlook of the Fed's monetary policy, with the Dow Jones, Nasdaq, and S&P 500 all closing higher. Despite Expedia's weak outlook, its shares were highly sought after on Wall Street, likely due to the conservative target set by the company.
