rate hike
NEW YORK (awp international) – The US stock exchanges reacted moderately positively to the interest rate hike by the domestic central bank, the Fed, on Wednesday. As widely expected, the monetary watchdogs raised the key interest rate significantly by 0.5 percentage points – it is now in a range of 0.75 to 1.0 percent. The background to the step is the high level of inflation, which is currently more pronounced than it has been for a good 40 years. The central bank had already initiated the turnaround in interest rates in March with the first interest rate hike in the corona pandemic. In addition, the Fed wants to melt down its balance sheet, which has been bloated by crisis measures.
The Dow Jones Industrial, which got off to a friendly start, shook off its intermittent listlessness and most recently gained 0.39 percent to 33,257.58 points, continuing the moderate gains since the beginning of the week. On Monday, the leading index had temporarily slipped to its lowest level since the start of the Ukraine war on February 24.
The market-wide S&P 500 turned positive after the interest rate decision and was 0.21 percent higher at 4184.41 points. At 13,077.18 points, the technology-heavy Nasdaq 100 was able to contain the previously severe minus to 0.10 percent. At the beginning of the week, both indices fell to their lowest level since spring 2021. Technology companies are particularly vulnerable to rising interest rates given their rather higher levels of debt.
In addition, the latest economic data from the world’s largest economy largely fell short of expectations. According to data from the private service provider ADP, the US private sector created fewer jobs in April than forecast. But that was more due to a labor shortage, which could signal further inflationary pressures from rising wages. Despite frequent discrepancies, the ADP data is still seen by many market participants as an indicator for the government’s monthly jobs report, which is due in two days’ time.
In addition, the mood in the US service sector had surprisingly deteriorated in April, as shown by the purchasing managers’ index of the Institute for Supply Management (ISM). Economists had expected an average increase. However, the index is still well above the growth threshold of 50 points. After all, US inventories of crude oil rose surprisingly last week – analysts had expected a decline.
On the company side, there were again many quarterly reports on the agenda in the middle of the week. The ride-hailing service Lyft shocked its shareholders with a gloomy outlook, as the share price fell by around a third to its lowest level in over two years. Uber’s shares also suffered as a result, with a drop of a good seven percent, although the competitor had given a better outlook.
From China, the New York-listed Didi Global is still at home in the Lyft industry. The papers slipped by almost four percent. In addition to the bad news from the US competition, reference was made to the US Securities and Exchange Commission, which is investigating the 2021 IPO. Because of the US note, Chinese regulators are already focusing on the company.
After positive news, Moderna titles recently rose by 0.9 percent. Thanks to its corona vaccine, the biotech company continues to earn brilliantly, Moderna earned more than three times as much in the first quarter as in the previous year. But there was also great relief because the sales forecast for the corona vaccine remains unchanged, even if the pandemic subsides in western regions. The shares of the Mainz rival Biontech lost 0.6 percent.
The titles of the chip group AMD, the coffee house chain Starbucks and the accommodation broker Airbnb, on the other hand, increased by two to eight percent according to figures. AMD convinced investors with a jump in sales and profits and the outlook for the second quarter. Starbucks cited strong quarterly sales and an upgrade from Evercore ISI experts. The first quarter was also surprisingly good for Airbnb, it said.
The shares of the oil companies Chevron and Exxonmobil were also comparatively strong with price premiums of 1.3 and 2.4 percent respectively. They were helped by the rising prices for the important raw material. The EU’s plans for an oil embargo against Russia could push prices up further./gl/he
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