new York Relief following the Fed’s interest rate signal and a jump in the share price of Facebook parent Meta have sparked a run on tech stocks on Wall Street. The index of the technology exchange Nasdaq closed 3.3 percent higher on Thursday at 12,200 points. The Dow Jones index of standard values, on the other hand, lost 0.1 percent to 34,053 points. The broad S&P 500 gained 1.5 percent to 4179 points.
“Investors are encouraged by the fact that the Fed is trying to be at or near the end of its rate hike program,” said investment strategist Sam Stovall of CFRA Research in New York. The Federal Reserve had raised the key interest rate by only a quarter of a percentage point on Wednesday evening. After a series of relatively aggressive interest rate hikes, some normalcy is returning to monetary policy. The statements by Fed boss Jerome Powell also fueled confidence that the economy would get away with a black eye and that an expected recession would be rather mild, said stockbrokers.
The ECB’s central bankers headed by Christine Lagarde raised the key interest rate by 50 basis points and announced an increase of the same amount for March. The euro was still 0.7 percent weaker at $1.0916. “The market reaction tells a different story than what we’ve heard from all three central banks over the past few hours,” said analyst Michael Hewson of CMC Markets. “While central banks are essentially saying we need to keep raising rates, the markets are saying, ‘We don’t believe you and even if you go back up, you have to go back down by the end of the year.”
In London, the Bank of England (BoE) announced the tenth interest rate hike in a row. Most market participants had expected an increase of half a percentage point to 4.0 percent. However, the central bank signaled that the interest rate peak is approaching and that inflation has probably peaked. The pound fell 1.1 percent to an intraday low of $1.2236. “This is clearly the last major hike from the Bank of England, we’re heading towards the end of this rate cycle in March or May,” said Ben Laidler, market strategist at brokerage eToro.
Course jump at Meta
On the Nasdaq stock exchange, however, the positively received signals from Meta were now considered the decisive price driver. The Facebook parent company performed better than expected in the past quarter, despite another decline in sales. In addition, Facebook founder and Meta boss Mark Zuckerberg promised further cost reductions.
While Meta jumped 23 percent, Align Technology’s shares on the Nasdaq 100 even dwarfed this with a plus of more than 27 percent. The manufacturer of splints for correcting misaligned teeth also exceeded expectations.
Before the quarterly reports expected after the market close, which should help decide whether the sector rally can continue, Apple, Amazon and Alphabet were also among the big gainers in the tech industry. The stocks of the three giants rose between 3.7 and 7.4 percent. Away from tech stocks, shares in postal competitor Fedex rose 6.1 percent.
Look at the individual values
Microsoft: Microsoft from the tech sector was at the top of the Dow with a price increase of 4.7 percent. However, the strength of the tech stocks contained there was not enough to support the leading index, because on the other hand there was the weight of falling stocks, for example from the healthcare sector. A disappointing business outlook for the pharmaceutical company Merck & Co caused its shares to slip by 3.3 percent.
Pinterest: Pinterest is also involved in job cuts in the US technology sector. As a result, the shares of the online photo pinboard rose by around eight percent. The company plans to cut 150 jobs or lay off a little less than five percent of the workforce, reports the Bloomberg news agency, citing insiders. A Pinterest spokesman confirmed the job cuts but declined to comment on the number of jobs eliminated. The group intends to present figures in the coming week.
US stock exchange expert Koch: “Meta meets all expectations of Wall Street”
Eli Lilly: The US pharmaceutical company is feeling the dwindling demand for its corona drugs. In the fourth quarter, sales therefore fell by nine percent to $ 7.3 billion, as the company announced on Thursday. The papers lose more than six percent.
Harley-Davidson: Customers were not deterred from buying the cult motorcycles by inflation and concerns about the economy. This caused the traditional US company to jump in profits to $39.7 million in the fourth quarter, after $21.6 million a year ago, as Harley Davidson announced on Thursday. The papers of the group increase by more than twelve percent.
Merck: On the other hand, a lower-than-expected annual forecast from Merck caused long faces. Shares of the drugmaker fell more than 4.5 percent.
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