US Stock Exchanges Post Losses Amid Debt Dispute and Nervousness over Possible Fed Rate Hike

NEW YORK (dpa-AFX) – The US stock exchanges posted losses on Wednesday. On the one hand, there is nervousness about the hoped-for compromise in the US debt dispute. On the other hand, after robust data from the US labor market, stock market traders were again worried about a possible further rate hike by the US Federal Reserve in the fight against inflation. Disappointing economic data from China also had a negative impact, as the economic recovery there has stalled.

Der Dow Jones Industrial ended trading at a moderate discount of 0.41 percent to 32,908.27 points, which means a total loss of 3.5 percent for the month of May. The market-wide S&P 500 lost 0.61 percent to 4179.83 points in the middle of the week.

For the Nasdaq 100 it fell by 0.70 percent to 14,254.09 points, making May a strong month for the technology exchange. The increase is 7.6 percent. Since the beginning of the year, the index has even recovered by around 30 percent and is back to the level of April 2022. Most recently, the fantasy surrounding future opportunities for artificial intelligence in particular caused euphoria in the industry after the chip company Nvidia
had given an impressive outlook in the past week.

On the economic side, the data from the US Department of Labor in the Jolts report attracted particular attention. The number of vacancies surprisingly rose above the 10 million mark again in April. This means that there is still no cooling off in the labor market, which should give the Fed scope for further interest rate hikes. This, in turn, is not well received by stockbrokers, since rising interest rates can make other forms of investment more attractive.

With regard to the debt dispute, the draft law to avert the government’s insolvency has meanwhile cleared an important hurdle in the House of Representatives. The vote in the US Congress this Wednesday is still pending.

“The bill is expected to be passed,” said market analyst Edward Moya of broker Oanda. However, he fears that the debt deal will ultimately prove negative for the US economy as limited spending combined with tighter Fed monetary policy are likely to lead to a recession by year-end. The US economy has stagnated recently, according to the US Federal Reserve’s current economic report (Beige Book). The Fed’s assessment is thus similar to that of mid-April.

Looking at the individual values, HP Inc and Hewlett Packard Enterprise with their quarterly reports and statements on the outlook. The sales of the PC and printer manufacturer HP collapsed more clearly than feared. According to stockbrokers, this testifies to the weak demand in the PC market. Information technology company Hewlett Packard Enterprise, on the other hand, disappointed with its sales expectations, which dragged its shares down 7.1 percent. HP was down 6.1 percent. The share certificates of the PC manufacturer Dell
were dragged down and lost 5.3 percent. Dell itself wants to present its quarterly report on Thursday after the market close.

American Airlines stocks increased by a good 1.1 percent. The airline surprised on the upside with its second-quarter adjusted profit guidance.

A positive analyst comment from Deutsche Bank brought the papers of the car rental company Avis Budget an increase of 2.8 percent. Analyst Chris Woronka believes that short- and medium-term expectations regarding rental car prices and the value of user vehicles are too negative. He therefore upgraded the shares from “hold” to “buy” and raised the price target to $263.

The Euro was trading at $1.0687 at the Wall Street close. The European Central Bank had set the reference rate in Frankfurt at 1.0683 (Tuesday: 1.0744) dollars. The dollar thus cost 0.9361 (0.9308) euros. On the US bond market, the futures contract for ten-year government bonds (T-Note Future) rose by 0.40 percent to 113.61 points. In return, the yield fell to 3.637 percent./ck/stw

— By Claudia Müller, dpa-AFX —

 ISIN  US2605661048  US6311011026  US78378X1072

AXC0338 2023-05-31/22:36

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