Powell talks down Wall Street

Powell talks down Wall Street
Powell talks down Wall Street

(ABM FN-Dow Jones) The American stock markets ended lower on Thursday. The S&P 500 fell 0.8 percent to 4,347.35 points, the Dow Jones index lost 0.7 percent to 33,891.94 points and the Nasdaq closed 0.9 percent lower at 13,521.45 points.

Wall Street slumped after a speech by Federal Reserve Chairman Jerome Powell. According to him, it is still too early to put a definitive end to the historic interest rate increases of the past two years.

The Fed raised interest rates this year to their highest level in 22 years to combat inflation by slowing economic activity. The US central bank aims for an interest rate that is “sufficiently restrictive” to bring inflation back to the 2 percent target over time.

“We are not confident that we have achieved this yet,” Powell said Thursday. However, he left the door wide open to maintaining the federal funds rate again at its current level of 5.25 to 5.50 percent at the next meeting in December.

Kathleen O’Neill Paese of the St. Louis Fed said Thursday that the central bank has room to wait for new macro data on the economy and inflation before deciding whether to raise rates further. In September, Paese was one of the Fed members who predicted one more rate hike in 2023.

The ten-year interest rate in the US has fallen in recent days from a sixteen-year high of around 5 percent to around 4.5 percent. On Thursday evening the yield was 4.64 percent.

The stock markets are currently moving in line with bond yields. “The fear is that those higher rates on the curve will act as a drag on the economy,” said James Ragan of DA Davidson.

The earnings season in the US is now coming to an end. About 88 percent of the companies in the broad S&P 500 index have presented their results. While profit expectations were often exceeded, declining demand resulted in only 62 percent exceeding revenue expectations.

Economic news was on Thursday regarding weekly new jobless claims in the US, which showed a slight decline, but did not come as a surprise.

WTI oil became half a percent more expensive on Thursday. In the previous days, oil prices fell sharply due to concerns about a weakening global economy and relief that the conflict around Gaza has not yet really spread to other countries in the Middle East.

The euro/dollar was 0.4 percent lower at 1.0667 on Thursday evening after Powell’s words.

Company news

Disney posted better-than-expected profits and added nearly 7 million “core subscribers.” The share gained almost 7 percent.

ARM reported better than expected results, but the outlook was mediocre and so the share fell more than 5 percent.

Lyft also reported a bigger-than-expected profit, projecting fourth-quarter revenue to be around 5 percent higher than the third quarter. The share still lost 6 percent, because the growth in the number of bookings clearly lagged behind that of rival Uber, which opened its books earlier this week.

Beyond Meat saw its losses shrink last quarter, but turnover was also under pressure. The share rose as much as 2.5 percent.

Shares of Warner Bros and Paramount closed in the green on Thursday after it was announced that a preliminary agreement had been reached between the actors and major film studios and streaming giants in Hollywood. This puts an end to a months-long strike. Netflix’s share fell slightly.

Tesla fell 5.5 percent on Thursday, after a sell recommendation from HSBC.

Source: ABM Financial News

ABM Financial News is a supplier of stock market news, video and data, both for real-time trading platforms and dealing rooms and for online and offline media publications. The information in this article is not intended as professional investment advice or as a recommendation to make certain investments.

The article is in Dutch

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