(ABM FN-Dow Jones) The American stock markets closed lower on Wednesday, partly after Jerome Powell signaled in his comments after the interest rate decision that an interest rate cut in March is unlikely.
The leading S&P 500 index fell 1.6 percent to 4,845.65 points, the Dow Jones index lost 0.8 percent to 38,150.30 points and the Nasdaq closed 2.2 percent lower at 15,164.01 points.
Investors had their hands full again today with an avalanche of company figures. Not only today’s, but also from the giants Alphabet and Microsoft after trading yesterday.
But all attention on Wednesday was focused on the Fed’s interest rate decision and Jerome Powell’s explanation. Interest rates remained unchanged as expected, but an interest rate cut in the short term does not seem to be possible and Powell implicitly indicated that March might still be too early.
The Fed also said in its statement accompanying the decision that it does not expect to cut rates until policymakers have “greater confidence” that inflation will fall toward 2 percent.
The economic outlook is currently uncertain, the central bank said, saying it remains “very attentive” to inflation risks. The risks of achieving the employment and inflation targets are better balanced, according to the central bank.
Still, the central bank responded to traders by removing the part of the statement that indicated the central bank still had a tightening bias. The Fed removed a phrase that referred to “additional policy strengthening.” So no more increases.
Pre-market figures from pay slip processor ADP also showed on Wednesday that employment in the US increased by 107,000 jobs in January, significantly less than the 158,000 a month earlier. The market expected a growth of 150,000 jobs in January.
It was also announced that the number of mortgage applications in the US fell by 7.2 percent last week and that economic activity in the Chicago region also unexpectedly fell further in January. The purchasing managers index fell from 47.2 to 46.0 points. Economists expected an average improvement of up to 48.0 points in advance.
Oil prices fell on Wednesday and a barrel of WTI oil became 2.53 percent cheaper at $ 75.85, partly as factory activity in China shrank for the fourth month in a row. However, oil prices have posted their first monthly increase since September as the US and Iran appear to be on the brink of a more direct confrontation in the Middle East. US crude oil and the global benchmark Brent rose almost 6 percent in January.
The American ten-year interest rate barely rose after the interest rate decision and explanation from the chairman and closed at 3.94 percent.
The euro/dollar fell to 1.0810 after Jerome Powell’s explanation
Risers and fallers
Alphabet fell 7.3 percent, despite better-than-expected results. However, total advertising revenue lagged behind expectations.
Microsoft lost 2.7 percent. The Redmond-based software company saw revenue and profit rise last quarter and outperformed analyst expectations. Revenue rose 18 percent year over year to $62.0 billion.
Boeing won more than 5 percent. The American aircraft manufacturer again wrote red figures last quarter, but managed to significantly reduce losses. The group did not provide an outlook for 2024, as the impact of the incident on an Alaska Airlines flight, in which an emergency exit of the aircraft failed during a flight, cannot yet be assessed.
Starbucks lost 1.1 percent after the company saw comparable sales grow by 5 percent in the past quarter, which was less strong than the previous quarter and also less than analyst expectations of 7 percent. The share nevertheless gained 4.8 percent.
Mastercard was able to add 0.9 percent and reached the highest level in 12 months. The credit card company posted a profit of $2.97 per share on revenue of $6.5 billion last quarter. That was more than analysts expected.
PayPal fell by 3.7 percent. The payments company plans to reduce its global workforce by another 9 percent, meaning around 2,500 job cuts.
Advanced Micro Devices lost 2.5 percent. The company saw a significant increase in turnover and especially profit in the fourth quarter, but the outlook for the current quarter was poor.
Walmart lost 0.2 percent after the retailer announced a 3-for-1 stock split.
Tesla shares fell 2.2 percent after a Delaware court declared CEO Elon Musk’s nearly $56 billion bonus package invalid.
Qualcomm will publish its figures after trading hours on Wednesday.
Source: ABM Financial News
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