Investors expect the Fed to raise rates soon.
(Photo: Reuters)
Frankfurt, New York After the recent price gains, US investors are shifting down a gear. The US standard value index Dow Jones rose 0.1 percent on Thursday to 35,969 points, after gaining a good 1 percent on Wednesday. The technology-heavy Nasdaq, on the other hand, fell by almost two percent, causing the broad S&P 500 to slide 0.5 percent into the red.
The decision of the US Federal Reserve to cut back its securities purchases more quickly and to signal three rate hikes for 2022 will be viewed positively, said analyst Susannah Streeter from the brokerage firm Hargreaves Landsdown. “The main thoughts of investors revolve around inflation. So they welcome the Fed’s move to keep the lid on. In addition, the growth prospects for the US economy are good, said Ulrich Stephan, chief investment strategist for private and corporate customers at Deutsche Bank.
The latter gives a boost to cyclical stocks, said portfolio manager Paul Nolte of asset manager Kingsview. Technology stocks, on the other hand, suffered from the prospect of interest rate hikes. Experts say that higher interest rates will devalue future profits for these high-growth firms. The shares of Amazon, Apple, Facebook, Netflix and the Google parent Alphabet lost up to 2.6 percent.
The US currency also came under selling pressure. The dollar index, which reflects the rate to major currencies, lost 0.3 percent. Apparently, with a view to the interest rate forecasts of the Fed management team, the so-called dot plots, investors realized that interest rates will rise faster but not higher than previously expected, wrote the analysts at Rabobank.
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In the commodities market, on the other hand, investors focused on the optimistic statements made by Fed chairman Jerome Powell on the economic outlook. In addition, there are encouraging data on demand from the US Department of Energy, said analyst Tamas Varga from the brokerage company PVM. The US oil type WTI rose 2.2 percent to 72.41 dollars per barrel (159 liters).
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Accenture: The IT and consulting firm’s titles rose up to ten percent to a record high of $ 413.10. The quarterly results exceeded expectations in all areas, praised analyst Surinder Thind from the investment bank Jefferies. The company had quarterly sales of $ 14.97 billion and increased new business by 30 percent to $ 16.8 billion.
Vir Biotechnology: The titles of Vir Biotechnology, which were more than nine percent more expensive, were also in demand. The EU health authority EMA approved the drug, which was developed together with GlaxoSmithKline, for the treatment of coronavirus patients. Glaxo shares rose to a year and a half high of 1,624.2 pence at times in London. Competitor Regeneron, on the other hand, had to accept a price drop of almost four percent. According to the company, his Covid drug is less effective in treating the newly discovered variant of Omikron.
US stock market expert Koch: “Wall Street hopes for Christmas rally after Fed decision”
Lennar: The quarterly profits and sales fell short of the forecasts. The house builder suffered from higher wood costs as well as increased labor costs and shortages of raw materials, which led to delays in home delivery. The stock fell three percent.
Novartis: Novartis has launched a new share buyback program worth up to $ 15 billion. These buybacks are expected to end by the end of 2023. The shares rose five percent.
Visa: Visa stock rose just under 1 percent after it was announced that the company added $ 12 billion to its share buyback program. The total amount of the repurchase authorization increased to $ 13.2 billion.
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