US investors shake off interest rate worries
The US stock markets put their worries behind them at the end of the week after Fed Chairman Powell's harsh words. Powell's rhetoric is tougher than the Fed's actions, say analysts. Investors are particularly keen on tech stocks.
After the previous day's setback, the US stock markets closed the evening with significant gains and more than made up for their losses. Investors recently put aside renewed interest rate concerns. The Dow Jones index closed 1.2 percent higher at 34,283 points. The S&P 500 rose by 1.6 percent. The Nasdaq Composite was 2.0 percent firmer. There were a total of 2103 (Thursday: 754) price gainers and 757 (2126) price losers. A total of 68 (58) stocks closed unchanged.
The topic of conversation on the market continued to be the comments made by US Federal Reserve Chairman Jerome Powell the previous day, which were interpreted as hawkish. Powell had said that future progress in the fight against inflation might have to be achieved by limiting demand. While the Federal Reserve is satisfied with its success so far in easing price pressures, it is not sure whether interest rates are high enough to bring inflation down to the target of 2 percent in the long term.
Share prices fell in response to these statements, while yields rose sharply on the bond market. The markets continued to assume that the Fed was finished with the interest rate hikes, according to market commentators with a view to the significant recovery at the end of the week. "The Fed's actions are not consistent with its tough rhetoric," said Peter Cardillo from Spartan.
US consumer index falls
On the bond market, yields at the long end fell slightly after the previous day's sharp rise. The yield on 10-year paper fell by 1.0 basis points to 4.61%, while the yield on 30-year bonds dropped 3.9 basis points to 4.73%. On the currency market, the dollar was somewhat weaker after the previous day's gains. The dollar index fell 0.1 percent.
Oil prices rose. Prices for WTI and Brent rose by up to 2.0 percent. However, they fell over the week. According to market participants, the recent sell-off has priced out the risk premium due to the war between Israel and Hamas, as the conflict has so far remained limited to the region. ING considers the sharp fall in prices to be exaggerated, as the fundamental data suggests a tighter supply and thus higher prices, at least in the short term. The price of gold fell significantly after the slight recovery of the previous day. The price of a troy ounce fell by 1.1 percent. On the economic side, US consumer sentiment deteriorated in November. The consumer sentiment index calculated at the University of Michigan fell to 60.4. Economists had expected a level of 63.7. In the survey at the end of October it was 63.8.
Disney in the red - Groupon and Plug Power slump
Disney (-2.3 percent) is putting its TV channels to the test. As part of a strategic review of the television business initiated by CEO Bob Iger, the Group has identified sales and the transfer of channels to its joint venture with Hearst as possible scenarios, according to people familiar with the matter. Groupon was in the spotlight with a capital increase. Shares in the voucher portal plummeted by 34.8 percent. The figures for the fourth quarter of the financial year took a back seat.
Plug Power even slumped by 40.3 percent after the hydrogen and fuel cell manufacturer warned that it would find it difficult to stay afloat next year without raising additional cash. After Illumina lowered its annual forecast, the share price fell by 8.0 percent. Although the DNA sequencing specialist earned more than expected in the third quarter, sales were below analysts' consensus.
Following the reassuring remarks from Federal Reserve Chair Jerome Powell, concerns about potential interest rate increases seemed to ease in the US stock markets. Despite Powell's assertions that future progress against inflation might require limiting demand, investors saw this as a temporary adjustment rather than a return to aggressive monetary tightening. As a result, the Dow Jones Index, S&P 500, and Nasdaq Composite all posted significant gains, indicating a positive sentiment towards interest rate policy direction, given by the Federal Reserve, or the 'Fed'.
In the realm of bond trading, the yield on 10-year and 30-year US Treasury papers slightly decreased, following the previous day's surge. The market had interpreted the Fed's language as less hawkish than initially believed, implying that the interest rate policy might not be as aggressive as initially anticipated, which contributed to the bond yields adjustment.
Source: www.ntv.de
