Wall Street is back on the recovery path.
(Photo: Reuters)
Dusseldorf US investors have gotten over their initial shock that the Fed could raise interest rates more aggressively. They returned to Wall Street on Tuesday. The Dow Jones index of standard values closed 0.7 percent higher at 34,807 points. The technology-heavy Nasdaq advanced about two percent to 14,108 points. The broad S&P 500 gained 1.1 percent to 4511 points.
On Monday, Fed Chair Jerome Powell surprised investors by saying that he would not rule out interest rate hikes of half a percentage point in the coming months. “The market isn’t worried about higher interest rates right now,” said stock trader Dennis Dick of brokerage firm Bright Trading. Instead, he welcomes a more restrictive stance from the US Federal Reserve to get inflation under control.
Against this background, investors resorted to financial stocks, among other things, which beckon higher profits from the classic lending business when interest rates rise. Bank of America, Citigroup and JPMorgan rose as much as 3.1 percent. Government bonds, on the other hand, flew out of the depots. That pushed the yield on 10-year T-Bonds to 2.377 percent. At the same time, the iShares exchange-traded fund (ETF) on US Treasuries fell 0.5 percent to a three-year low of $24.83.
Look at the individual values
Nike: In terms of stocks, Nike was among the favorites after the sporting goods maker reported quarterly results that beat market expectations. The key to this was the improvement in replenishment, commented analyst Camilo Lyon from brokerage house BTIG. Due to the uncertain economic environment, however, he warned against buying Nike shares, as price setbacks are to be expected at any time. The titles gained 2.2 percent. In the slipstream, Adidas and Puma gained up to 3.2 percent.
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Tesla: Tesla shares were also in demand, gaining almost eight percent. The electric car manufacturer opened its factory near Berlin and handed over the first vehicles “made in Germany” to customers.
Alibaba: Alibaba’s US-listed stocks rose more than 11 percent. The Chinese online retailer wants to buy back its own shares in a record volume of 25 billion dollars. Since further acquisitions are difficult due to the strict regulation, this step is logical, said Rukim Kuang, founder of the research house Lens Company Research.
Boeing: At the top of the Dow, Boeing’s shares almost completely made up for their previous day’s losses with a plus of 2.8 percent. All 132 people on board are believed to have died when a 737-800NG crashed in southern China on Monday.
Goldman Sachs: In terms of financials, Goldman Sachs stock returned well and JPMorgan stock gained more than two percent. Higher interest rates would strengthen the earning power of the big banks.
More: Buy, sell or sit out? How investment professionals position themselves in times of crisis