NEW YORK (Dow Jones) — Sobering returns to US stock markets on Thursday after prices rallied on Wednesday. While unexpectedly weak economic data are fueling economic concerns, they are raising hopes that the US Federal Reserve may be slowing the pace of interest rate hikes.
The Dow Jones index hardly changed shortly after the starting bell. The S&P 500 is also hovering around Wednesday’s close. The Nasdaq Composite is down 0.2 percent.
The previous day’s gains were triggered by relief that the US Federal Reserve had hiked interest rates by just 75 basis points, as widely expected, instead of 100. Fed Chairman Jerome Powell’s statements during the subsequent press conference were interpreted as dovish. In the meantime, however, disappointing business figures and pessimistic outlooks from major companies have made it clear to investors that the prospects for the domestic economy are not exactly rosy.
Under the economic data of the day, gross domestic product shrank 0.9 percent in the first quarter, while economists had forecast growth of 0.3 percent. The US economy has thus slipped into a technical recession after GDP had also fallen in the first quarter. The number of initial jobless claims fell less sharply than expected in the previous week, and the value from the week before was revised upwards.
Quarterly reports with light and shadow
The list of companies that have submitted their quarterly reports is far longer. Among these, Honeywell (+2.4%) reported a fall in profits, but nevertheless turned over and earned more than expected. Merck & Co (-2.3%) and Pfizer (-3.4%) also exceeded expectations. Pfizer even achieved record sales. However, there are fears that drug manufacturers’ profits could be squeezed if Medicare were allowed to negotiate drug prices with the manufacturers themselves.
Mastercard (+1.2%) reported a significant increase in sales and profits. The credit card company reported that the high inflation has not reduced consumer spending so far.
The Facebook parent Meta (-7.3%) reported for the first time ever a decline in sales over the year; the profit dropped significantly. The view was also disappointing.
Qualcomm (-3.8%) also gave a rather cautious outlook, but surprisingly increased its profit significantly in the past quarter.
Ford (+4.7%) reported an unexpectedly strong increase in sales and profit.
After the market closes, figures from the heavyweights Amazon, Apple and Intel follow.
A political decision helps stocks in the solar industry to jump. Senator Joe Manchin from the conservative wing of the Democrats has now approved the US government’s $369 billion climate protection package. Sunnova Energy jumped by 32 percent, also supported by the company’s good figures. First Solar is up 19 percent and Sunpower is up 17 percent.
Dollar recovers – ING sees upside potential
The dollar is recovering somewhat from the pullback it saw following the US Federal Reserve interest rate decision. ING analysts see the dollar on the way up, albeit with more volatility, as it is now more sensitive to economic data. A global economic downturn and geopolitical risks are likely to support the dollar as a safe haven in times of crisis.
The bond market, which is also regarded as a safe haven, is experiencing lively growth, which is reflected in falling yields. The price of gold is also increasing.
The price of oil continues to rise significantly. It is benefiting again from the decline in US oil stocks that was reported on Wednesday.
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INDEX last +/-% absolute +/-% YTD
DJIA 32,209.94 +0.0% 12.35 -11.4%
S&P 500 4,024.53 +0.0% 0.92 -15.6%
Nasdaq Comp. 12,008.61 -0.2% -23.81 -23.2%
Nasdaq-100 12,540.43 -0.5% -61.04 -23.2%
US Bonds
Term Yield Bp to VT Yield VT +/-Bp YTD
2 years 2.88 -14.5 3.02 214.5
5 years 2.69 -15.5 2.84 143.0
7 years 2.70 -13.8 2.84 126.4
10 years 2.67 -11.7 2.79 116.1
30 years 2.99 -7.6 3.07 109.2
FOREX last +/- % Thu, 8:51h Wed, 17:25 % YTD
EUR/USD 1.0161 -0.4% 1.0209 1.0126 -10.6%
EUR/JPY 136.66 -1.9% 138.35 138.32 +4.4%
EUR/CHF 0.9718 -0.7% 0.9796 0.9753 -6.3%
EUR/GBP 0.8364 -0.3% 0.8394 0.8421 -0.5%
USD/JPY 134.50 -1.5% 135.51 136.60 +16.8%
GBP/USD 1.2146 -0.1% 1.2164 1.2024 -10.2%
USD/CNH (Offshore) 6.7450 +0.0% 6.7438 6.7691 +6.1%
Bitcoin
BTC/USD 23,096.38 +1.6% 23,151.18 20,837.45 -50.0%
ROHOEL last VT-Settl. +/- % +/- USD % YTD
WTI/Nymex 98.68 97.26 +1.5% 1.42 +37.9%
Brent/ICE 108.07 106.62 +1.4% 1.45 +44.3%
GAS VT close +/- EUR
Dutch TTF 204.00 205.00 -0.6% -1.23 +240.2%
METALS last day before +/- % +/- USD % YTD
Gold (Spot) 1,753.44 1,734.14 +1.1% +19.30 -4.2%
Silver (Spot) 19.80 19.18 +3.3% +0.63 -15.0%
Platinum (Spot) 892.88 890.10 +0.3% +2.78 -8.0%
Copper Future 3.49 3.43 +1.7% +0.06 -21.4%
YTD at the close of the day
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(END) Dow Jones Newswires
July 28, 2022 09:51 ET (13:51 GMT)
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