Persistent fears about a longer period of restrictive monetary policy in the USA kept Wall Street courses in check on Thursday. The major stock market indices mostly stagnated, while yields increased on the bond market.
The Dow Jones Industrial was slightly down 0.13 percent at 33,909 points, continuing the consolidation of the past three trading days. The market-wide S&P 500 was moderately up 0.12 percent at 4371 points. The technology-heavy Nasdaq 100 gained 0.71 percent to 14,973 points, recovering from a significant loss the previous day.
US Federal Reserve Chairman Jerome Powell’s statements on Wednesday were cited as a reason for the subdued market sentiment. Powell confirmed before the finance committee of the House of Representatives that the signs point to further increases in key interest rates by the end of the year. He stated that two more rate hikes this year are “a pretty good guess” and that it will “take a long time” to bring inflation down to the desired 2 percent target.
Investors have started to reconsider the optimism sparked by the recent US interest rate pause. Janet Mui, head of market analysis at RBC Brewin Dolphin, stated that “recession risks are arguably higher if interest rates stay higher for longer, but risk assets don’t reflect that.” The interest rate spiral is also expected to continue upwards in Europe, as the central banks of England, Norway, Switzerland, and Turkey raised their key interest rates on Thursday.
In terms of individual stocks, Root’s stocks made a significant jump, increasing by almost 40 percent and building on their 60 percent rally from the previous day. The “Wall Street Journal” reported that a potential buyer for the insurance company had been found, with Embedded Insurance making an offer to buy Root shares at a premium of 221 percent to Tuesday’s closing price.
Amazon’s shares rose 3.6 percent following rumors of interest in Ocado by technology companies from the USA. The British “Times” reported the speculation, with Amazon being mentioned as a possible buyer. Ocado, which offers software and hardware for online grocery retailing, saw its shares jump a third in London.
Boeing was the biggest loser in the Dow, experiencing a 2.4 percent decline. The aircraft manufacturer’s largest supplier, Spirit Aerosystems, suspended production due to a strike by unionized workers, causing shares in Spirit Aerosystems to drop by over eight percent.
Despite a downgrade by Morgan Stanley, Tesla’s shares turned positive after initial losses. The bank removed the buy recommendation for the electric car manufacturer, but analyst Adam Jonas emphasized that Tesla is still “a must in every electric car portfolio.”
How have the statements made by US Federal Reserve Chairman Jerome Powell impacted investor sentiment and market performance?
US Federal Reserve. This has raised concerns among investors about a longer period of restrictive monetary policy in the USA.
These fears have kept Wall Street courses in check, with the major stock market indices mostly stagnating on Thursday. The Dow Jones Industrial was slightly down 0.13 percent at 33,909 points, continuing the consolidation of the past three trading days. The market-wide S&P 500, on the other hand, was moderately up 0.12 percent at 4371 points. The technology-heavy Nasdaq 100 showed some resilience, gaining 0.71 percent to 14,973 points, recovering from a significant loss the previous day.
Investors were particularly affected by US Federal Reserve Chairman Jerome Powell’s statements on Wednesday. Powell confirmed before the finance committee of the House of Representatives that the signs point to further increases in key interest rates by the US Federal Reserve. This confirmation has contributed to the subdued market sentiment.
Overall, the persistent fears about a longer period of restrictive monetary policy in the USA have weighed on Wall Street, leading to a cautious trading day. Investors will continue to monitor any further statements from the US Federal Reserve for insights into the future path of monetary policy.
The anticipation of restrictive monetary policy is causing anxiety on Wall Street, with investors growing fearful of its potential impact on the market.