Speculation about rate hikes slows Wall Street

Frankfurt The US stock exchanges failed to find a common direction on Tuesday. The US standard value index Dow Jones closed 0.6 percent higher to 35,813 points. The technology-heavy Nasdaq, however, lost 0.5 percent to 15,775 points. The broad S&P 500 gained 0.2 percent to 4690 points.

“It is conceivable that interest rates will be raised earlier than expected,” explains Rick Meckler, partner at asset manager Cherry Lane, explaining the background. That is positive for banks, but negative for the other industries, especially the technology sector.

According to experts, rising inflation and higher interest rates are devaluing future profits for these high-growth companies. Banks, on the other hand, wave higher profits from the traditional lending business when interest rates rise.

The speculation about interest rate hikes was fueled by the nomination of the former central bank chief Jerome Powell for a second term. This decision was more unfavorable for the stock market, said Benjamin Bente, managing director of asset manager Vates. The nomination of the central bank director Lael Brainard, who is also highly regarded for the post, would have been a signal for a longer-term loose monetary policy. “Powell will at least tighten the screws a little.”

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Investors pulled back on US Treasuries in anticipation of a faster slowdown in Fed asset purchases. This drove the yield on ten-year Treasuries to a four-week high of 1.669 percent at times.

Oil price is going up

On the other hand, the oil price rose, although the USA wants to alleviate the supply bottleneck by releasing state reserves. Brokers criticized that oil companies would have to return the additional crude oil at a later date. In addition, the announced amount of 50 million barrels would have been sold under the recently passed debt reduction laws anyway. The US variety WTI increased in price by 2.6 percent to 78.77 dollars per barrel (159 liters).

The biggest drop in the Turkish lira in more than 20 years also caused a stir. The trigger for the panic sales was President Recep Tayyip Erdogan, who defended the notebank’s latest rate cuts and vowed to win his “economic war of independence” despite criticism. As a result, the dollar rose up to 18.6 percent to a record high of 13.4913 lira. The only way to stop the fall of the Turkish currency is an emergency rate hike, warned analysts at Bank Societe Generale (SocGen).

Look at individual values

Best Buy: In the individual stocks, Best Buy caused a sensation with a price drop of more than twelve percent. The electronics trader’s shares were heading for the largest daily loss in eight years. Due to delivery problems, the company warned of a Christmas business below market expectations. It expects sales in the fourth quarter to be at the level of the same period in the previous year.

zoom: Investors react with disappointment to the business figures of the video conferencing provider. With a minus of a good 18 percent, the share headed for the largest daily loss in the company’s history. With its quarterly sales, the company exceeded market expectations, but the increase of 35 percent was the lowest so far. Since Zoom is also blowing an increasingly sharp wind in the face in Europe and the Middle East, a further slowdown in growth is to be expected, writes analyst Shebly Seyrafi of the brokerage firm FBN.

Dollar tree: Price increases encourage investors to join the US discounter. The stock climbed 7.4 percent on Wall Street to a record high of $ 142.39. The company, known for its one-dollar products, plans to offer almost all of its goods for $ 1.25 in the fight against rising freight costs. Dollar Tree’s third-quarter sales exceeded market expectations, but earnings shrank to $ 0.96 from $ 1.39 per share.

Pasithea: The release of an antidepressant in Great Britain gives the California-based biotech company the biggest price jump in the company’s history. The stock rose on Wall Street by a good 230 percent to a record high of 7.32 dollars. In the USA, the nasal spray is already approved in combination with another drug for the treatment of persistent depression.

Gap: Supply chain problems, rising freight costs and factory closures in Vietnam are affecting the fashion chain. The company believes it could lose up to $ 650 million in revenue. It is lowering its sales and profit targets for the full year, even if demand for fashion from its Oldy Navy brand remains high. In terms of net sales growth, Gap is now only assuming 20 percent instead of the previous 30 percent. The company is screwing earnings expectations down to between $ 1.25 and $ 1.40 per share after $ 2.10 to $ 2.25 so far. The price of the gap paper collapses after hours by more than 14 percent.

Urban Outfitters, Abercrombie & Fitch: Rising freight costs are also causing problems for the fashion companies Urban Outfitters and Abercrombie & Fitch. The former presented mixed financial results, while the latter warned of lower margins for the current quarter. Urban Outfitters’ shares then fell nine percent. Abercrombie titles plummeted by more than twelve percent.

Walt Disney: The mother Walt Disney is threatened with the loss of films and series on the streaming service Hulu. The entertainment company’s shares fell 2.5 percent on Wall Street. According to the “Wall Street Journal”, the broadcaster NBC Universal, minority owner of Hulu, is thinking about offering most of its programs exclusively on its own streaming portal Peacock in the future.

More: Twelve stocks that investors can use to invest in the future.

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