NEW YORK (Dow Jones) — Wall Street’s slide continued Thursday after Federal Reserve Governor Jerome Powell’s monetary policy announcements the previous day. Sentiment remains subdued as, while the pace of rate hikes is likely to slow, which investors are welcoming, Powell has made it very clear that the rate peak is likely to be higher than market estimates so far. The interest rate hikes could therefore be smaller after the last 75 basis points, but the cycle of interest rate hikes last longer and end at a higher level. The Dow Jones Index is down another 0.6 percent to 31,971 points, while the S&P 500 and Nasdaq Composite are down 0.9 and 1.2 percent, respectively.
The Fed remains “determined” to keep inflation under 2 percent, according to Powells. Current inflation is still a long way from achieving this goal. In addition, Powell is aiming for a positive real interest rate, so there is still some monetary tightening waiting for the Fed. Powell opened up the possibility of the central bank raising interest rates to higher levels than previously expected, commented Brooks Macdonald’s chief investment strategist Edward Park. “He contradicted the market’s perhaps naïve view that the Fed will either tighten or be accommodative,” Park said. According to dealers, there is still some need for adjustment on the market.
US unit labor costs fell in the third quarter compared to the previous period and also rose less significantly than expected. But so soon after the Fed’s decision, the data doesn’t play a major role, especially since the weekly labor market data turned out a tad better than expected. As a result, the labor market remains tight, which speaks for rising wage costs.
Dollar and yields keep going up
The dollar extends Thursday’s gains sharply. The dollar index advances 1.5 percent. Commerzbank FX analyst Thu Lan Nguyen says Powell has primed the market for a slower pace of rate hikes without being seen as dovish. The British pound comes under pressure after the UK interest rate hike. According to currency analyst Sam Cooper from the Silicon Valley Bank, the interest rate peak is likely to be lower than the market has priced in.
Traders in the US bond market are coming to a similar assessment as for the greenback, where quotations are accelerating their downward movement of the previous day and pushing yields higher. Here, too, market participants speak of hawkish statements – at least with a view to the interest rate peak. Rising market interest rates and a very strong dollar are depressing the price of gold.
Oil prices, meanwhile, are falling more sharply. Rising interest rates are depressing economic growth and thus the demand for oil, according to the market calculations.
Moderna in the minus
The US biotech group Moderna, known for its corona vaccine, has had to withdraw its forecast for the current year after a slump in sales in the third quarter. Due to supply chain issues, sales are likely to be up to $3 billion lower than originally planned. The course is 4 percent, Biontech lose 2.2 percent. Sportswear maker Under Armor (+13.9) beat analyst estimates for adjusted earnings and sales in the fiscal second quarter amid declining readings.
A disappointing outlook sends Roku stock (-15.6%) plummeting. Altice USA slumps over 30 percent. The mother of the cable television company Cablevision is struggling, among other things, with falling advertising revenues and has therefore recorded a decline in sales and earnings in the third quarter.
Qualcomm’s price is down 8.4 percent. The chip manufacturer’s sales forecast was bleaker than expected. Ebay, on the other hand, presented better business figures than expected. In addition, the operator of the online auction house of the same name gave a solid outlook for the current fourth quarter. This helped the share to gain 6.6 percent.
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INDEX last +/-% absolute +/-% YTD
DJIA 31,970.94 -0.6% -176.82 -12.0%
S&P 500 3,725.08 -0.9% -34.61 -21.8%
Nasdaq Comp. 10,398.18 -1.2% -126.62 -33.5%
Nasdaq-100 10,761.15 -1.3% -145.20 -34.1%
US Bonds
Term Yield Bp to VT Yield VT +/-Bp YTD
2 years 4.73 +13.0 4.60 400.3
5 years 4.40 +8.3 4.32 314.0
7 years 4.30 +7.8 4.22 285.9
10 years 4.18 +7.6 4.10 266.8
30 years 4.18 +4.4 4.14 228.2
FOREX last +/- % Thu 8:02 Wed 17:32 % YTD
EUR/USD 0.9745 -0.7% 0.9808 0.9865 -14.3%
EUR/JPY 144.40 -0.6% 144.83 145.09 +10.3%
EUR/CHF 0.9878 +0.3% 0.9857 1.0004 -4.8%
EUR/GBP 0.8726 +1.2% 0.8617 0.8610 +3.8%
USD/JPY 148.21 +0.2% 147.65 147.08 +28.8%
GBP/USD 1.1166 -2.0% 1.1380 1.1459 -17.5%
USD/CNH (Offshore) 7.3499 +0.1% 7.3301 7.3165 +15.7%
Bitcoin
BTC/USD 20,168.84 +0.3% 20,303.95 20,383.23 -56.4%
CRUDE OIL last VT settlem. +/- % +/- USD % YTD
WTI/Nymex 88.43 90.00 -1.7% -1.57 +26.6%
Brent/ICE 94.61 96.16 -1.6% -1.55 +29.0%
GAS VT Settlem. +/- EUR
Dutch TTF 129.51 125.86 +2.9% +3.64 +107.7%
METALS last day before +/- % +/- USD % YTD
Gold (Spot) 1,618.32 1,634.10 -1.0% -15.78 -11.5%
Silver (Spot) 19.10 19.21 -0.5% -0.10 -18.1%
Platinum (Spot) 921.70 935.15 -1.4% -13.45 -5.0%
Copper Future 3.40 3.47 -1.9% -0.07 -22.8%
YTD relative to previous day’s close
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(END) Dow Jones Newswires
November 03, 2022 09:57 ET (13:57 GMT)
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