Euphoria on Wall Street after stabilizing US interest rates (Getty)
The day after the Federal Reserve announced the stabilization of key interest rates, US stocks continued their recovery, with the Dow Jones Industrial Average ending the day’s trading up 564 points, as some began to confirm the end of the current interest rate hike cycle, and the continued strong performance of the stock market, in what is known as “ End of year rally.
By the end of Thursday’s trading, the rising points in the most famous index in the world represented 1.70% of its value at the beginning of the day, and the Nasdaq index rose by 1.78%, while the rise in the broader S&P 500 index reached 1.89%.
Stocks benefited today, Thursday, from the confident tone of Jerome Powell, Chairman of the Federal Reserve, about the decline in inflation in the country, which he considered a sign that the largest central bank in the world was not intending to raise interest rates further, so the S&P 500 index recorded its best days since April. It also recorded the first two consecutive days of increases exceeding 1% since February.
The Nasdaq also recorded its best day since July. At the weekly level, the three main indicators were in the green zone, with rates of increase ranging between 4.4% – 5%.
Yields on 10-year US Treasury bonds fell by about 12 basis points, reaching 4.668%, after their yield, the most important in the US market, exceeded the 5% level for a few minutes last month. A decline in bond yields usually adds momentum to stock market strength.
Data released Thursday morning showed declining inflation and a slowdown in the American labor market. The Labor Department said labor costs unexpectedly fell in the third quarter.
In Europe, stocks rose more than 1% on Thursday, led by real estate and technology stocks that are more sensitive to interest rates, amid growing optimism that central banks have finished tightening credit, after the United States, Britain and Norway kept interest rates unchanged this week.
The STOXX 600 index of European stocks ended today’s trading up 1.6%, and is close to recording its highest level in two weeks.
The British Financial Times 100 Index rose 1.4%, after the Bank of England kept interest rates at the highest level in 15 years, and Norwegian stocks also rose 0.7%, after the Central Bank of Norway kept interest rates steady as well.
Real estate stocks rose 5.2%, and technology sector stocks rose 2.7%, together leading the gains.
Reuters data showed that manufacturing activity in the euro zone slowed again last month, in light of a broad decline, with new orders shrinking at one of the highest rates since 1997. German unemployment rose more than expected in October.
On the other hand, oil prices rose by more than $2 per barrel today, Thursday, ending a series of losses that lasted for three days, with the return of risk appetite in financial markets, after US interest rates were fixed for the second meeting in a row.
Brent crude futures rose $2.22, or 2.6%, to reach $86.85 per barrel upon settlement, and US West Texas Intermediate crude futures rose $2.23, or 2.8%, to reach $82.67 per barrel upon settlement.
Policymakers are finding it difficult to determine whether tightening monetary policy is already enough to control inflation, or whether an economy that is consistently beating expectations may need further adjustment.
The US inflation rate stabilized at 3.4% in September for the third month in a row. Oil investors are closely following the US Federal Reserve’s monetary policy decisions, fearing that large increases in interest rates will slow the economy and affect energy demand.
2023-11-02 22:17:01
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