Powell says Wall Street is growing fast

Another session in a row on the New York Stock Exchange ended in a draw. Share prices were not being supported by the balanced statements from the head of the Federal Reserve. The data from American business was also unimpressive.

“If the economy as a whole behaves as expected, monetary policy will move toward a more neutral position over time,” said Fed Chairman Jerome Powell. – But we are not on a predetermined course. The risks are mutual and we will continue to make decisions from meeting to meeting, said Powell.

After such a statement by the head of the Fed, the market significantly reduced expectations for a 50-point cut in interest rates at the FOMC meeting in November. On Monday, the probability of such a solution decreased from futures contracts from 53% to less than 33%. In theory, a deeper rate cut would benefit equity holders by lowering the discount rate and (other things being equal) increasing the valuation of listed businesses model.

Due to the increase in the last minutes of trading, the main indexes of New York ended the session on Monday above the mark. The S&P500 gained 0.42% and finished trading at 5,762.45 points. THEN Last week, this index again set new all-time nominal recordsbut each time the daily increases were small and did not exceed 0.4%.

Let’s add here that the Nasdaq has not yet set new records, although large technology companies were the favorites of Wall Street investors in the first half of 2024. On Monday, the Nasdaq gained 0.38%. The Dow Jones remained unchanged (0.04%), which set a new record on Friday.

We will be celebrating the second anniversary of the beginning of the bull market in the US stock market soon after a moderate bear market in 2022. It is only since the beginning of this year that the S&P500 and Nasdaq Composite have each gained more than 20%, and the Dow Jones industrial average has risen nearly 12%. Even the “small” company sector represented by the Russell2000 index has revived and is up nearly 10% this year after a sideways movement that lasted for the previous two years.

It is also worth adding that the data from the industry was not unique. The Chicago PMI regional index increased from 46.1 points. up to 46.6 points higher than expected at 46.2 points. However, this is still a clearly declining reading. The regional index of the Dallas Fed also shows a decline, which in September was -9.0 points compared to -9.7 points. in August and the market consensus of -4.5 points.

Among the largest companies, slight weakness in the semiconductor sector was reflected in Micron Technology shares down 3.5%. Intel shares fell nearly 1.9%, while the price of Texas Instruments fell more than 1%.

KK

Source: