A trader at the New York Stock Exchange at work.
(Photo: AP)
Frankfurt The biggest rate hike in almost 30 years ultimately dampened the buying mood on the US stock exchanges only a little. Shortly after the announcement of the interest rate hike of 75 basis points, the Dow Jones turned negative for a short time. At the close of trading, the index of standard values was again at 30,668 points and thus one percent firmer.
The broader S&P 500 closed a good 1.4 percent higher at 3,789 points. The tech-heavy Nasdaq ended the day up 2.5 percent, having peaked at more than 3.8 percent.
This shows that the extraordinarily large rate hike was already priced in by investors. “The Fed is committed to doing whatever it takes to bring inflation down,” said Naeem Aslam, chief market analyst at brokerage firm AvaTrade. Price reactions were not as violent as some investors had expected.
With an interest rate step of 0.75 percentage points, the key interest rate ends up in a range of 1.5 to 1.75 percent. The monetary watchdogs last raised the key interest rate so sharply in 1994. Market observers initially assumed that interest rates would be lower by 0.5 percentage points. Rumors of tougher action by monetary watchdogs had already shocked the markets on Monday.
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The dollar index, which tracks rates against major currencies, rose 0.5 percent after the Fed meeting to a 19-1/2-year high of 105.79 points. In the course of further trading, however, the index gave up its gains again and closed 0.47 percent lower at 104.79 points.
Treasury bonds also fell, pushing the yield on 10-year T-bonds to 3.437 percent. At the close of trading, 10-year government bonds were yielding 3.29 percent.
In the case of cryptocurrencies, on the other hand, the descent continued. Bitcoin fell by almost nine percent at times and stayed just above the psychologically important $20,000 mark. Ethereum slipped as much as 15 percent and at $1012.68 was as cheap as it was a year and a half ago. Analyst Jochen Stanzl of online broker CMC Markets said he thinks it’s possible that troubled crypto lender Celsius will have to sell cybercurrency on a massive scale to make collateral payments. “The situation does not seem to be calming down.”
Meanwhile, a gloomy outlook from the International Energy Agency (IEA) put a temporary end to the oil price rally. Because of rising interest rates, the appreciation of the dollar and a possible slowdown in the economy, the authorities are warning of a drop in demand. As a result, US crude oil WTI fell by a good one percent to $117.67 per barrel (159 liters). However, the supply is still tight, said analyst Jeffrey Halley from brokerage house Oanda to consider. “I don’t see any change here unless the global economy goes into recession.”
Individual values in focus
Hertz: Hertz was among the winners on Wall Street. The titles of the car rental company headed for the largest daily gain in two and a half months with a price increase of more than ten percent at times. The company announced a new $2 billion share buyback program. At the close of trading, the paper was around five percent higher.
Nucor: The shares of Nucor were also in demand, increasing in price by 2.4 percent. Thanks to high demand, the steel manufacturer is targeting a surprisingly high surplus of $8.75 to $8.85 per share for the current quarter.
Boeing: Hopes that the 737 MAX model could be relicensed for flight operations in China spurred Boeing. The aircraft manufacturer’s shares gained more than nine percent. The speculation was fueled by a test flight by China Southern. It was the first since the airline’s older 737 crashed in March.
Baidu: The papers rose by 2.8 percent. Reuters news agency had reported that the China-based internet search giant was in talks to sell its majority stake in video streaming company iQIYI. iQIYI shares fell 2.3 percent.
Microstrategy: The stock fell 9.2 percent. because the bitcoin price hit an 18-month low. The business analytics company has extensive Bitcoin holdings.
Robinhood: The trading platform operator’s stock was downgraded to “underweight” from “neutral” by analyst firm Atlantic Equities. The reason is the company’s negative sales trend. Robinhood shares slipped 2.5 percent.
snowflakes: The cloud computing company has been upgraded from hold to buy by Canaccord Genuity. Shares are down more than 65 percent in 2022, but Canaccord said the stock now makes an attractive entry point given growing demand and promising new products. Snowflake gained 7.6 percent.
Wheels Up: The private jet company’s stock rose more than 20 percent. US bank Goldman Sache began rating the stock with a “buy” rating, saying Wheels Up is a leader in an established and growing end market.
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