NEW YORK (awp international) – According to the economic report from the US Federal Reserve (“Beige Book”), the losses on the US stock exchanges shrank significantly on Wednesday. Earlier, strong domestic economic data had raised fears of aggressive monetary tightening.
After a friendly start, the Dow Jones Industrial slipped quickly into the red. After at times clearer deductions, he lost only 0.23 percent to 32,913.72 points. The leading index thus continued its moderate setback on Tuesday – before that it had increased for six trading days in a row and thus recovered from a low since March 2021. The market-wide S&P 500 fell 0.24 percent to 4122.25 points. The technology-heavy Nasdaq 100 recorded a minus of 0.05 percent to 12,636.19 points.
According to the purchasing managers’ index of the Institute for Supply Management (ISM), the mood in US industry improved surprisingly in May. Economists, on the other hand, had expected sentiment to deteriorate. In contrast, the “Beige Book” states that economic growth in the USA has recently weakened. However, economic output continued to grow in all twelve districts of the Fed.
In the further course of the week, data on the labor market will be available, which could provide more clarity with regard to further economic development. On Thursday, the labor market service provider ADP will report on the development of employment in the private sector in May. The weekly initial jobless claims are also on the agenda. Both sets of data are seen by many investors as indicators for the US government’s monthly jobs report, which is expected on Friday.
Statements by the Fed last week were seen as evidence that US interest rates were only being raised gradually. Broker Oanda’s Jeffrey Halley spoke of market sentiment swinging, with bargain hunters increasingly desperate to find a cyclical bottom.
The Fed has already hiked interest rates twice this year. This Wednesday it will also begin to melt its balance sheet, which was inflated by the purchase of securities, which were carried out to support the economy during the pandemic.
The strategists at Citigroup are now assuming that the headwind on the stock markets will not be over after the first difficult five months. They see the risk of falling profit forecasts by companies as a further problem for unsettled investors.
Company news received mixed reviews midweek. The software group Salesforce thrilled with a higher profit forecast. The fact that the SAP competitor is now promising lower annual sales did not bother investors, as the price jump of a good eleven percent showed.
At the computer manufacturer HP Inc, the shareholders were happy about a price increase of four and a half percent after the quarterly figures.
Meanwhile, the airline Delta Air Lines expects sales in the second quarter to be at the level before the corona pandemic. The shares fluctuated violently – most recently they lost over four percent.
Shares of S&P Global lost four and a half percent. The financial services group has put its financial forecast on hold due to deteriorating macroeconomic conditions – new targets are not expected to be announced until the second quarter figures. The disappointed investors also punished competitor Moody’s with a price drop of five and a half percent./gl/he
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