The Federal Reserve (Fed) will announce the latest monetary policy decision later, and the market generally expects to raise interest rates by 1 yard (25 basis points). The central bank’s follow-up news, the major US stock indexes rose and fell on Wednesday (1st).
before the deadline,Dow Jones Industrial Averagefell more than 160 points or nearly 0.5%,Nasdaq Composite Indexfell more than 20 points or nearly 0.2%,S&P 500 Indexfell nearly 0.2%,Philadelphia SemiconductorThe index rose more than 1%.
The U.S. ADP employment report data, known as “small non-agricultural”, showed that private employment increased by 106,000 in January last year, far lower than the market’s expected 180,000, and halved from the previous value of 235,000, mainly due to weather factors. . However, the figure far below expectations may suggest that the Fed’s decision to raise interest rates by 1 yard later has no suspense.
In addition, the ADP report also showed that wage growth increased by 7.3% in January for the second consecutive month, with wage growth in most industries little changed. Salary growth for workers who changed jobs rebounded slightly to 15.4% year-on-year from 15.2% in December.
The recent gains in U.S. stocks have prepared the stock market for a showdown with the Fed, with traders bracing for a policy shift that Fed Chairman Jerome Powell and his colleagues are not yet ready to implement. Recent U.S. data showing weaker-than-expected wage costs, a cooling housing market and falling consumer confidence have all suggested that the Fed’s rate hikes over the past year have begun to curb inflation, but still-loose financial conditions complicate the Fed’s task change.
Before the Fed announced its February monetary policy decision, the 10-year U.S. bond yield fell by about 4 basis points, and the market expected the Fed to announce a 1-point rate hike.
Jeffrey Gundlach, founder and CEO of DoubleLine Capital, known as the “new debt king”, said that the Fed may refute its imminent stop raising interest rates after the monetary policy meeting, and then begin to ease policy before the end of the year statement.
Mike Bell, a strategist at JP Morgan Chase, said that the biggest threat facing the market at present is that if the economic recession does not become a reality and wage growth remains at its peak, it will force the Fed to maintain a hawkish stance and will not cut interest rates as expected by the market, but will have to cut interest rates this year. In the second half of the year, interest rate hikes will resume and the rate hike rate will be higher than Wall Street’s current expectations.
On the other hand, while some investors don’t expect a hard landing for the U.S. economy this year, the recent surge in bankruptcies of large companies is an ominous sign. According to a new data from foreign media, more than 20 large US companies (with debts of at least US$50 million) filed for bankruptcy in January, the highest number in a single month since January 2010. In January 2010, with the US economy still reeling from the aftermath of the global financial crisis, 25 companies filed for bankruptcy. Market analysts believe that the surge in bankruptcies of large US companies in January will continue.
Meanwhile, investors were digesting corporate earnings. Notably, Electronic Arts (EA-US) after lowering its financial forecast across the board, the pre-market share price collapsed by more than 10%.
As of 22:00 on Wednesday (1st) Taipei time:
Focus stocks:
Snap(SNAP-US) fell 11.07% in early trade to $10.28 per share
Snap turned from profit to loss last quarter, and predicted that its revenue could drop by as much as 10% this quarter, which disappointed investors who were expecting a turnaround in the digital advertising market, and also dragged down the performance of peers Meta and Pinterest. Snap shares fell nearly 15% in premarket Wednesday.
According to the financial report, Snap’s revenue in the fourth quarter was reported at US$1.3 billion, slightly lower than the market’s expected US$1.31 billion. The company forecast revenue for the current quarter to be down 2% to 10% from a year earlier, after an annual decline of 7% so far this quarter.
Supermicro (AMD-US) rose 3.69 percent to $77.92 a share in early trade
Advanced Micro Devices (AMD) reported better-than-expected earnings in the last quarter. The outstanding performance of the data center and embedded business helped to make up for the decline in personal computer (PC)-related businesses. Although the revenue outlook for this quarter was weak, it did not affect the stock price trend , up nearly 3% premarket on Wednesday.
The financial report shows that AMD’s revenue in the fourth quarter of last year increased by 16% to US$5.6 billion, which was better than the US$5.52 billion estimated by Wall Street analysts; the adjusted profit per share in the fourth quarter of last year was US$0.69, which was higher than the analysis The division expected $ 0.67. Divided by business, data center revenue increased by 42% to US$1.7 billion; client revenue, including PC chip business, decreased by 51% to US$903 million.
PayPal(PYPL-US) fell 0.13% to $81.38 per share in early trade
The online payment company PayPal recently announced on its official website that it plans to lay off 2,000 employees, equivalent to about 7% of the total manpower. But Wall Street analysts have warned that the company will need to cut more costs because business will be tough in the year ahead as customers brace for a potential recession and payouts are expected to fall.
Morningstar analyst Brett Horn said: “Raising margins has become an increasing focus for management over the past year, possibly in part due to pressure from activist investor Elliott Investment Management, which looks like a move toward this goal. Another step in that direction.”
Today’s key economic data:
- ADP employment in the United States in January reported 106,000, expected 178,000, and the previous value was 235,000
- The final value of the U.S. manufacturing PMI in January was XX, expected to be 46.8, the previous value was 46.8
- The ISM manufacturing index in the United States in January is expected to be 48, the previous value is 48.4
- In the United States, JOLTs job vacancies in December last year were expected to be 10.25 million, the previous value was 10.458 million
Wall Street Analysis:
Steve Donzé, deputy director of the investment department of Pictet Asset Management in Beijing, said that the focus of the market is that after the Fed announces its interest rate decision, it will emphasize the suspension or delay of the easing policy for this year and next year. The recent rally in U.S. stocks has largely been driven by the weakening of U.S. bond yields and the U.S. dollar. The market is worried that if the Fed does not move toward easing policy as expected by the market, it may have an impact on the bond yield curve and the stock market.
John Leiper, chief investment officer at Titan Asset Management, said,EURThe overall inflation in the region continued to decline, but core inflation excluding food and energy was flat, and price pressures remained high, especially in the service sector, which may remain high for a period of time.Also in view ofEURThe economic situation in the region has improved, and the European Central Bank is expected to raise interest rates again on Thursday, with a range of 2 yards (50 basis points) as widely expected.
