US Stocks Pared Gains After Fed Raises Interest Rates and Hints at Possible Pause in Tightening Cycle

After the Federal Reserve (Fed) raised interest rates by one yard as expected and hinted that it may pause the tightening cycle, U.S. stocks pared their earlier gains in late trading on Wednesday (3rd), and all four major indexes closed in black.Dow JonesIt ended down 270 points, or 0.8%, with the S&P andThat fingerfell 0.7% and 0.46% respectively,fee halfIt fell more than 1.3 percent.

The Fed raised interest rates by a quarter on Wednesday, bringing the benchmark interest rate to a target range of 5 percent to 5.25 percent, the highest level since 2007.

It is worth noting that,FOMC removes phrase “additional policy tightening may be appropriate” from statementhas softened its attitude towards the need to raise interest rates further in the future, suggesting a possible pause in the tightening cycle.

Powell said at the post-meeting press conference that abandoning this wording is a meaningful change, but the committee believes that inflation is still too high and will take some time to decline. In such a forecast scenario, it is not appropriate to cut interest rates options, the central bank’s policy decision next month will depend on future economic data.

After the Fed’s statement and Powell’s news conference, fed funds futures traders were pricing in an 89 percent chance the Fed would keep rates unchanged at its June meeting.

In terms of economic data, the United States announced on Wednesday that ADP added 296,000 new jobs in April, higher than expected, and the increase was the largest since July last year. Also, US ISM services sector activity maintained steady growth in April, but higher input prices suggest that inflation may remain high for some time.

When Ball spoke,S&P 500 IndexOnce fluctuating between ups and downs, all sectors collectively closed in the black at the end of the session. Among them, energy stocks performed the worst, falling by more than 1.9%, financial stocks also fell by about 1.2%, and raw materials stocks fell by 1.1%.

Turning to the banking crisis, Powell said the U.S. banking sector remains healthy and solid despite tightening economic conditions caused by March’s stress. He also said the sale of the bulk of First Republic to JPMorgan was an important step and a good outcome for the banking system.

Still, regional bank stocks extended losses, with the SPDR S&P Regional Bank ETF (KRE-US) closed down 1.8 percent, Zions Bancorp (ZION-US) closed more than 5% lower, while Western Union (WAL-US) fell 4.4%, while Westpac Banking Corp (PACW-US) closed down nearly 2%.

On Wednesday (3rd), the performance of the four major US stock indexes:

Focus stocks

The five kings of technology have mixed trends. apple (AAPL-US) down 0.65%; Meta (FB-US) fell 0.92%; Alphabet (GOOGL-US) rose 0.09%; Amazon (AMZN-US) up 0.02%; Microsoft (MSFT-US) fell 0.33%.

Dow JonesOnly five constituent stocks received dividends. Amgen (AMGN-US) fell 2.82%; JPMorgan Chase (JPM-US) down 2.12%; Chevron (CVX-US) down 2.01%; Goldman Sachs (GS-US) down 1.42%; IBM (IBM-US) fell 1.37%; Johnson & Johnson (JNJ-US) fell 1.31%; Kintor Heavy Industry (CAT-US) rose 0.23%; Disney (DIS-US) up 0.26%; Merck (MRK-US) up 0.28%; Verizon (VZ-US) rose 0.82%; Intel (INTC) rose 2.96%.

fee halfComponent stocks were mixed. Supermicro (AMD-US) down 9.22%: Wolfspeed (WOLF-US) fell 5.26%; Qualcomm (QCOM-US) down 2.82%; Micron (MU-US) fell 1.6%; Texas Instruments (TXN-US) fell 0.36%; Huida (NVDA-US) down 1.45%; Marvell (MRVL-US) up 0.08%: Microchip (MCHP-US) up 0.17%; Applied Materials (AMAT-US) up 1.01%; Intel (INTC-US) up 2.96%.

Taiwan stock ADR is dominated by TSMC. TSMC ADR(TSM-US) fell 0.31%; UMC ADR (UMC-US) up 0.13%; ASE ADR (ASX-US) up 1.34%; Chunghwa Telecom ADR (CHT US) up 0.22%.

Corporate News

Westpac Banking Corporation (PACW-SU) closed down 1.98%, before collapsing 55% after hours. Bloomberg reported that the regional bank is evaluating various strategic options, including a sale, a spin-off and financing being considered.

The news weighed on other regional bank stocks, with Western Union (WAL-US) plummeted 35% after hours, and the SPDR S&P Regional Bank ETF (KRE-US) fell 5.5%, and Comerica (CMA-US) and Zions Bancorp (ZION-US) fell more than 10% after the market, and Valley National Bancorp (VLY-US) fell as much as 26% after hours.

Supermicro (AMD-US) closed down 9.22%. The company announced that its latest financial report was better than expected, and it is optimistic that artificial intelligence (AI) and data centers will inject growth momentum into the second half of the year. rebound.

CVS Health(CVS-US) closed down 3.68%. The pharmacy chain announced better-than-expected results for the previous quarter before the market, but acquisition-related costs forced the company to revise down its full-year profit outlook.

Estee Lauder (THE US) closed down 17.34%, as the post-epidemic recovery in Asia is full of uncertainties, the company lowered its full-year sales outlook, and its profit in the last quarter also missed expectations.

Economic data

• U.S. ADP reported 296,000 new jobs in April, expected to be 150,000, the previous value revised from 145,000 to 142,000
• US April ISM non-manufacturing index reported 51.9, expected 51.6, previous value 51.2
• U.S. April Markit services PMI final value was 53.6, the previous value was 52.6
• U.S. April Markit Composite PMI final value was 53.4, the previous value was 52.3

Wall Street Analysis

Ed Moya, senior market analyst at Oanda, said: “Wednesday’s rate hike could be the last of the cycle, with the Fed concerned that tighter credit conditions will weigh on the economy and hiring. Tight credit is about to weigh on the economy unless there is a hotter-than-expected Employment and inflation performance, otherwise the Fed will keep interest rates unchanged until the end of the year.”

Glenmede analyst Jason Pride said: “The Fed may be on hold, but it hasn’t turned yet. The central bank is signaling that additional tightening may or may not be on the table, but a rate cut doesn’t seem to be on the table.”

Adam Phillips, portfolio strategy manager at EP Wealth Advisors, said that although there was a debate about pausing interest rate hikes before this meeting, Powell once again won unanimous support from officials to raise interest rates by one yard, and future policy decisions may not be so clear. Keep all options.

The numbers are all updated before the deadline, please refer to the actual quotation