new York Investors on Wall Street are holding back ahead of the US Federal Reserve’s interest rate decision on Wednesday. The Dow Jones index of standard stocks closed almost unchanged on Monday at 34,624 points. The broader S&P 500 also left trading little changed at 4,453 points. The index on the technology exchange Nasdaq rose slightly to 13,710 points.
“This week investors are fully focused on the Fed meeting, although there is almost unanimous consensus that key interest rates are still where they are today on Wednesday evening,” said Konstantin Oldenburger, an analyst at broker CMC Markets. “Because the big question is not whether the Fed will raise interest rates again, but how long interest rates will stay where they are now.”
It remains unclear where monetary policy will go in the long term. “Fed Chairman Jerome Powell can trigger big moves in either direction with his comments, and you don’t want to be caught on the wrong side,” said Peter Tuz of asset manager Chase Investment Counsel. “The best strategy for the next few days is to wait and see what happens.”
The data situation on which the monetary authorities want to base their actions remains largely inconsistent. A series of better-than-expected economic data recently eased concerns about a possible recession without increasing fears of a rate hike in September.
However, the recent sharp rise in energy prices threatens to drive up inflation, according to analysts. “Oil prices are also influencing the narrative right now and the Fed will take this into account,” said Peter Andersen, founder of Andersen Capital Management.
Oil prices remained at their highest level in ten months due to supply concerns and speculation about a recovery in demand in China. Brent crude oil cost $94.59 per barrel, while US light oil cost $91.98 per barrel. The drivers are China’s economic policy, robust economic data from the USA and the ongoing OPEC+ production cuts, said Tina Teng, analyst at broker CMC Markets.
“This increase in oil prices is slowing down the economy in several ways,” stated Thomas Altmann from asset manager QC Partners. “On the one hand, direct energy costs are becoming more expensive again. On the other hand, higher oil prices lead to higher inflation rates, which in turn result in higher interest rates and thus higher financing costs.”
US stock market expert Koch: “Wall Street in the shadow of the Fed meeting”
Individual values in focus
At the start of the week, the rally in Arm shares also stopped. Bernstein analysts initiated coverage of the company with an “Underperform” rating, which is equivalent to a sell recommendation. It’s too early to call Arm an AI winner. The stock then fell to $58. The issue price was $51.
When it comes to individual stocks, pharmaceutical companies came under the radar. Moderna lost around nine percent, Novavax 3.9 percent and Pfizer 1.2 percent. Pfizer CFO David Denton expects a corona vaccination rate of 24 percent in the USA this year.
Other tech stocks went on a rollercoaster ride. Microsoft, Nvidia, Broadcom, Marvell and Lam Research, which were initially significantly in the red, turned positive and gained up to around 1.5 percent. According to experts, higher interest rates reduce future profits for these high-growth companies.
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