NEW YORK (awp international) – On Tuesday, the leading US index Dow Jones Industrial continued the recovery course it had interrupted at the beginning of the week. Financial stocks were buoyed by the prospect of the central bank raising rates potentially steeper than previously expected. In addition, pleasing business figures from the sports goods manufacturer Nike put everyone in a good mood. In addition, investors were relieved to learn that oil prices did not continue their recent strong rise for the time being.
The Dow rose by 0.78 percent to 34,824.12 points and thus approached the 35,000 point mark last exceeded in mid-February. The broader S&P 500 was up 1.12 percent to 4,511.07 points, and the tech-heavy select index Nasdaq 100 gained 1.85 percent to 14,642.27 points.
The day before, central bank chief Jerome Powell had already brought up the possibility of faster interest rate hikes in view of the “much too high” inflation rate. The Fed could also raise interest rates by more than 0.25 percentage points at upcoming meetings of the central bank if necessary. However, Powell’s statements only briefly caused uncertainty and were interpreted positively on Tuesday.
“Confidence in the Fed still prevails among equity investors,” said fund manager Thomas Altmann from asset manager QC Partners. Here everyone assumed that the Fed would only raise the key interest rate so much that it would not harm the economy.
Analyst Jeffrey Halley from broker Oanda warned against being too careless. In addition to the interest rate hikes, he refers to the Fed’s considerations of reducing the balance sheet, which has been swollen as a result of the Corona aid programs, which would roughly correspond to a further interest rate hike. This raises the question of whether the Fed’s growth forecasts for the economy in this environment are correct. The abrupt switch from loose to tight monetary policy, while the Ukraine war is sending another wave of costly inflation across the world, does not inspire confidence. At the same time, an end to the war is not in sight.
Among the best performers on the Dow, shares of Nike rose 2.7 percent. The Group accelerated its revenue growth in the third fiscal quarter. Analysts responded with higher price targets. Expert Kate McShane from the bank Goldman Sachs praised the China business in particular, which had improved unexpectedly compared to the previous quarter.
In terms of financials, Goldman Sachs stock returned well and JPMorgan stock gained more than two percent. Higher interest rates would strengthen the earning power of the big banks.
The shares of the Chinese Internet giant Alibaba, which are listed in New York, even rose by a good 12 percent after it announced further share buybacks worth billions.
The shares in the English football club Manchester United benefited from a buy recommendation from Deutsche Bank with a plus of one and a half percent to just under 14 US dollars. Analyst Connor Murphy sees significant upside potential up to $18. The stock valuation, which is low compared to the industry, is not appropriate. Manchester United is one of the world’s best-known and most valuable sports franchises./la/ngu
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