new York One day after the start of the turnaround in interest rates, the US stock exchanges continued to work their way up. The Dow Jones index and the S&P 500 closed on Thursday at 34,480 and 4411 points, each up 1.23 percent. The Nasdaq technology exchange gained 1.3 percent to 13,614 points. Investors were busy gleaning the Fed’s interest rate decision. As expected, the central bank had raised the key interest rate by a quarter of a point to the new target range of 0.25 to 0.50 percent in the fight against high inflation.
The Fed also signaled a more aggressive rate hike cycle than many pundits had anticipated. “The market is still trying to get a sense of what this latest news from the Fed means going forward,” said portfolio manager Adam Phillips of wealth manager EP Wealth Advisors.
For now, it looks like there is still confidence in the Fed’s ability to avoid a recession. But there are also some things in the Fed’s statement that stand in the way of investor relief and the magnitude of the immediate price gains, said Rabobank equity strategist Philip Marey.
The negotiations between Ukrainians and Russians also remained in the focus of investors. “It remains to be seen whether the optimism about a possible peace agreement is overdone.” According to the Kremlin, talks are in full swing amid the fighting, but reports of significant progress are untrue.
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US stock market expert Koch: “The stock market is breathing easier after the Fed’s interest rate hike”
The conflict and its economic consequences are getting central banks around the world in trouble in their fight against inflation. As expected, the Bank of England (BoE) raised the key rate by a quarter of a percentage point to 0.75 percent on Thursday. However, the central bankers indicated more cautious increases than previously expected for the coming months. According to the analysts at NordLB, the war is also complicating the BoE’s need for rapid monetary policy realignment, which is still firmly aimed at.
On the oil market, fears of supply bottlenecks caused by the war in Ukraine determined market activity. The warning from the International Energy Agency (IEA) of Russian supply disruptions pushed the price of North Sea oil Brent back above the 100 dollar mark. It rose in price by up to 9.4 percent to $107.26. Meanwhile, speculation about economic stimulus in China boosted the prices of metals such as aluminum and palladium.
Look at the individual values
energy sector: With oil prices soaring, these stocks were among the winners. Shares in shale oil producer Occidental Petroleum climbed more than nine percent. Devon Energy, APA, Marathon Oil and Diamondback Energy also rallied. Shares in oil heavyweights Chevron and ExxonMobil gained 1.7 and 2.6 percent, respectively.
Fertilizer manufacturer: Investors are counting on a successful compensation for missing raw material deliveries from Eastern Europe. Nutrien and CF Industries shares gained 4.8 and 4.6 percent, respectively. Nutrien wants to ramp up its potash production in the second half of the year. Prices for potash, a key feedstock for nitrogenous fertilizers, have skyrocketed since economic sanctions were imposed on Russia after its invasion of Ukraine. Fertilizer and salt companies Mosaic and Intrepid Potash were also up 6.1 and 14.3 percent, respectively.
Dollar General: The prospect of full-year results above market expectations put investors in a buying mood. The discounter’s shares rose by 4.4 percent. As more and more Americans look at their money when shopping, the company expects sales to increase by around 10 percent in 2022. The profit will increase twelve to 14 percent.
More: Buy, sell or sit out? How investment professionals position themselves in times of crisis