new York Wall Street is unable to maintain its initial gains after the Fed’s decision. The US standard value index Dow Jones turns into the red and loses 0.3 percent. The S&P 500 and Nasdaq indexes also gave up their gains shortly before the close in New York.
The US Federal Reserve has announced that it will stop purchasing securities by the beginning of March. In doing so, it prepared the ground for a first rate hike shortly thereafter. “Everything that the Fed formally and officially communicated today was already expected and priced into the prices,” said portfolio manager Thomas Altmann from asset advisor QC Partners.
Some stockbrokers expected a total of four interest rate increases by a quarter of a percentage point each for 2022. But Fed Chair Jerome Powell indicated that the Fed could also act much more aggressively.
So he didn’t rule out the possibility of rate hikes at each of the seven remaining meetings this year. An increase of 0.5 percentage points is also an option. After that, the markets turned negative.
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The head of the Fed pointed out that this time the US economy is “in a completely different situation than when interest rates were last turned around in 2015.” With an unemployment rate of 3.9 percent, the labor market is now practically at full employment. The economy is growing significantly and inflation is at seven percent for the first time in 40 years.
Investors interpreted his words as preparing them for a more aggressive approach. But Powell also emphasized maintaining as much flexibility as possible.
“The pandemic is not over yet,” he clarified. The Fed must consider how the pandemic is affecting the economy and the supply chain bottlenecks, which are lasting much longer than monetary policymakers had expected.
The surprisingly strong quarterly results and the optimistic outlook of the software company Microsoft brightened the mood on Wall Street. The prospect of accelerating growth in the Azure cloud division is a good omen for the entire industry, commented analyst Derrick Wood from Cowen. Microsoft shares rose five percent.
>> Read here our analysis: The debate about US monetary policy is becoming increasingly heated. A conversation between economists Krugman and Summers also provides information.
Look at other individual values
Boeing: The corona crisis and problems with the long-haul jet 787 “Dreamliner” caused the US aircraft manufacturer to lose another billion in 2021. At 4.3 billion US dollars (3.8 billion euros), the minus was almost two thirds lower than a year earlier.
The delivery stop for the “Dreamliner” had a particularly negative effect. The extraordinary costs of the model are likely to be around twice as high as previously estimated at around 2 billion dollars. The “Dreamliner” production is to remain at an extremely low level for the time being and only gradually increase to five machines per month after deliveries have started again. Boeing shares lost 1.1 percent in value.
Wall Street expert Koch: “Buy recommendations for Microsoft pull the tech values up”
Apple: The iPhone maker has sold more cell phones in China than ever before. In the fourth quarter, Apple achieved a market share of 23 percent in the People’s Republic and has overtaken the local providers for the first time since entering the market six years ago, as the market research institute Counterpoint Research explained.
While total smartphone sales in China fell 9 percent during the period, Apple’s sales grew by a third. The Counterpoint experts see the new iPhone 13 and the US sanctions against the competitor Huawei as the reason. Apple will present numbers on Thursday. The stock rose 2.9 percent on Wednesday. Analysts assume that the group sold significantly more iPhones worldwide in the last quarter of 2021.
Texas Instruments: The chipmaker earned $2.27 per share last quarter, compared to a consensus estimate of $1.94. Sales were also above estimates. The chipmaker’s outlook beat analysts’ forecasts. Shares rose 4.4 percent.
More: Chart technicians see further downside risks