new York US investor optimism has eased somewhat following the release of minutes from the US Federal Reserve’s December meeting on Wednesday. Market barometers limited their gains in late US trading. The Dow Jones index of standard values closed 0.4 percent higher at 33,269 points. The tech-heavy Nasdaq advanced 0.7 percent to 10,458 points. The broad S&P 500 gained 0.8 percent to 3852 points.
The US Federal Reserve signaled a slower pace of monetary tightening in 2023 after a series of aggressive rate hikes to fight inflation. As can be seen from the minutes of the December meeting, the monetary watchdogs see “considerable progress” in curbing inflation as a result of their tight interest rate policy last year.
The task now is to balance the fight against high inflation and the danger of an excessive economic slowdown. According to most currency watchdogs, “flexibility and optionality” are required on the way to a course that will dampen the economy even more. This suggests that the pace of interest rate hikes could be curbed – to a quarter of a percentage point – at the Fed’s meeting in early February.
US Treasury bonds were buoyed by hopes that the Fed would end its XXL rate hikes. The yield on the 10-year bond fell to 3.6865 percent from 3.792 percent on Tuesday. Portfolio manager Dickie Hodges from the investment bank Nomura considers the prospects for the bond markets in the new year to be “almost consistently positive”. In the short term, the upward trend will probably be interrupted for the time being. The major central banks would still have to deal with unacceptably high inflation. “But the need to keep raising interest rates will soon disappear.”
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Falling bond yields helped tech stocks like Netflix, Apple and graphics card maker Nvidia gain between 1% and 4.9%. According to experts, rising inflation and higher interest rates will devalue future profits for high-growth tech companies.
At the same time, oil prices fell. “Warning signs of a global recession, China’s lackluster recovery with rising Covid-19 cases, renewed strength in the US dollar and subdued risk sentiment are all triggering factors that kept oil prices captive overnight,” said Yeap Jun Rong, market analyst at IG. The North Sea oil variety Brent and the US variety WTI expanded their losses on Tuesday and were almost five percent lower at 78.01 and 73.18 dollars per barrel (159 liters).
Look at other individual values:
Coinbase: In a $100 million settlement, the company settles a dispute with the New York financial regulator over alleged violations of money laundering laws. The stock rose 12.2 percent. Regulators fined the crypto exchange $50 million. Coinbase has also committed to investing $50 million in measures to prevent criminals from abusing the platform. Coinbase allowed users to open accounts without sufficient identity verification.
Chinese papers: Meanwhile, hopes for a long-term recovery from the recent coronavirus outbreak in China supported shares in US-listed Chinese companies. The prices of the tech companies Alibaba, JD.com and Baidu rose by up to 14.7 percent.
General Electric: The spin-off of the medical technology business has paid off for the shareholders of the US conglomerate General Electric (GE). GE HealthCare shares rose a good eight percent to $60.49 on their first day of trading. GE shares also gained 5.8 percent.
Microsoft: A downgrade puts pressure on the title of the software group. The shares lose 4.3 percent to $ 229. UBS analysts have downgraded the shares to neutral from buy and lowered the price target to $250 from $300 previously. After the boom in working from home, a slowdown in growth is expected for the cloud technology Azure and the Office program package, according to the analysts.
Pfizer: Shares of the pharma giant fell 2.2 percent after being downgraded from “buy” to “neutral” by Bank of America. One of the reasons for the downgrade was uncertainty about the extent of the decline in sales of the drugs Covid, Comirnaty and Paxlovid.
Starbucks: China optimism inspired the coffee house chain Starbucks. The coffee maker’s shares rose 3.6 percent to $104.46. Cowen analysts raised the price target to $112 from $104 previously on anticipation of a Chinese economy pick-up.
target: Wells Fargo had downgraded the stock from overweight to equal weight. The retail giant’s paper still gained up to 1.5 percent. According to Wells Fargo, Target’s prospects have deteriorated. In view of the general economic uncertainty, the share does not represent an attractive investment.
Tesla: At the end of trading, the share was up 5.12 percent after a price slide of twelve percent the day before. The electric vehicle maker missed expectations for fourth-quarter delivery and production numbers on Tuesday.
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