Equities New York close: indices at daily high after Fed rate hike | 03/16/22

NEW YORK (awp international) – The US stock exchanges extended their gains on Wednesday until the end of trading. The interest rate hike by the US Federal Reserve only temporarily dampened sentiment.

The leading index Dow Jones Industrial was listed at the end with an increase of 1.55 percent to 34,063.10 points, practically at its daily high. The same applied to the market-wide S&P 500 with a gain of 2.24 percent to 4357.86 points and to the technology-heavy selection index Nasdaq 100

As expected, the monetary watchdogs raised the key interest rate by 0.25 percentage points to a range of 0.25 to 0.50 percent in view of the high inflation. The Fed expects interest rates to rise to 1.9 percent by the end of the year, according to its new forecasts. Last December, the central bankers themselves indicated only three interest rate hikes this year, each by 0.25 percentage points. However, the current statements are in line with market expectations.

Before the interest rate decision, signs of easing in the Ukraine conflict had created a good mood. The negotiations between Kyiv and Moscow about an end to the war are becoming more concrete. Documents are being prepared for possible direct talks between President Volodymyr Zelensky and Russian President Vladimir Putin, said Ukrainian Presidential Advisor Mykhailo Podoliak, according to an interview with US broadcaster PBS.

According to the Financial Times newspaper, both sides are working on a 15-point plan. First and foremost are the neutrality and demilitarization of Ukraine demanded by Russia and the withdrawal of Russian troops demanded by Kyiv. Territorial issues should therefore only be discussed later. Ukraine’s presidential adviser Podoliak confirmed the existence of a draft agreement with Russia, but dampened expectations. The 15-point plan only reflects the Russian demands, “no more,” Podoljak wrote on Telegram. The Ukrainian side has its own position.

The prospect of an easing in the Ukraine conflict kept technology stocks in particular on their recovery course. In the Dow, Apple rose by almost three percent. After the production stop due to the corona lockdown in Shenzhen, southern China, Apple partner Foxconn partially resumed operations in the iPhone production facility in the metropolis. Sector-defining chip titles were also among the big winners. On the Nasdaq, Micron’s stock is up nearly 9 percent, and Nvidia is up over 6.5 percent.

Shares in Chinese technology companies listed on the Nasdaq were even more in demand: shares in the e-commerce platform Pinduoduo, the Internet company JD.com and the search engine operator Baidu rose by 39 to 56 percent. At Amazon’s competitor Alibaba, the shareholders were pleased about a price jump of almost 37 percent. Sector stocks from China had previously recovered strongly in the Far East after the state news agency Xinhua reported that the government had an interest in stabilizing the stock markets – and in Chinese stocks remaining listed on stock exchanges outside the country. Concerns about being excluded from the US market had weighed heavily on values ​​in recent weeks.

Starbucks shares rose more than five percent after US bank JPMorgan upgraded them to an overweight recommendation. In addition, the focus was on the change in management at the world’s largest café chain. Kevin Johnson is stepping down as CEO and his predecessor Howard Schultz is temporarily returning.

The fact that the top Spanish football club FC Barcelona will be working with Spotify as the main sponsor from the summer has given the shares of the music streaming market leader a price increase of almost eight percent.

In contrast, the titles of the armaments and technology group Lockheed Martin fell by around six percent. The Bloomberg news agency had reported, citing insiders, that the US Department of Defense is planning around a third fewer new F-35 stealth jets for the next budget than previously planned. Only recently it became known that the German government wants to buy up to 35 machines of the type as successors to the Tornados introduced more than 40 years ago.

At security software specialist Nortonlifelock, the announced $8.6 billion takeover bid for British competitor Avast caused the share price to fall by more than 13 percent. Its shares were also under pressure in London, as the responsible British authority expressed concerns about the transaction and wants to examine it more closely.

The Fed’s statements only gave the euro a brief setback: in New York trading, the common currency recently cost $1.1035, even more than before the interest rate decision. The European Central Bank had previously set the reference rate at $1.0994.

The Fed did not give any sustained impetus to US government bonds either. The futures contract for ten-year Treasuries (T-Note Future) recently lost 0.20 percent to 124.41 points. In return, the yield on ten-year government bonds rose to 2.17 percent./gl/jha/

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