NEW YORK (awp international) – Initial enthusiasm for softer US inflation data had faded quickly the day before. On Wednesday, it now appears that the buyers will not return even before the Federal Reserve’s interest rate decision tonight.
Broker IG expects the Dow Jones Industrial to be slightly negative at 34,088 points. The major US index jumped initially to 34,712 points on Tuesday, the highest level since April. Investors were pleased as the inflation rate eased to 7.1% year over year in November. There’s nothing stopping the Fed from raising the key interest rate this time by just 0.5 percentage point after four meetings with a 0.75 percentage point hike each time.
However, investors will not be satisfied with a slower turnaround, explained portfolio manager Thomas Altmann of QC Partners. “In view of the new significant decline in the inflation rate, stock traders are expecting an outlook for the end of the hike cycle,” said the expert. “And those expectations have intensified again.” The first forecasted the last interest rate hike in March and the first rate cuts in the third quarter at the latest. Altmann sees immense risks of disappointment here.
IG also rates the Nasdaq 100 technology selection index slightly weaker at 11,815 points. The day before, it had briefly returned to its mid-September level with 12,166 points.
Among individual stocks, midweek investors should keep an eye on shares of Tesla, which dropped to its lowest level since November 2020 at $156.91 on Tuesday. The annual downside for the electric car maker’s cards was around 55%. Before the market, the stock tends to fall back to the previous day’s low.
Shares of Charter Communications are down sharply. The telecommunications group is investing more than expected in its networks and therefore has less money to buy back its shares. In any case, a JPMorgan analyst has scaled back his expectations.
Stocks from Best Buy, Penn Entertainment and especially Quantumscape suffered as analyst ratings declined ahead of the market. On the other hand, Delta Airlines rose after positive trade signals./ag/mis
