NEW YORK (dpa-AFX) – The uncertainty regarding the extent of the upcoming interest rate hikes in the USA also weighed on the US stock exchanges on Tuesday. One day before the US Federal Reserve’s interest rate decision, the stock markets extended the losses from the beginning of the week somewhat. The Dow Jones Industrial (Dow Jones 30 Industrial) was down 0.50 percent to 30,364.83 points. The leading index plumbed another low since the beginning of last year. In the past four trading days, the loss has added up to almost eight percent.
The market-wide S&P 500 closed 0.38 percent lower at 3735.48 points on Tuesday. The technology-heavy selection index NASDAQ 100 held up slightly better with an increase of 0.21 percent to 11,311.69 points.
Investors’ concerns about interest rates were underpinned by new data on inflation. For example, producer prices in May did not rise quite as much as feared over the year. With an increase of 10.8 percent, however, inflation is still extraordinarily high. A rate hike by the Fed by 0.50 or 0.75 percentage points is considered possible on the financial markets. Goldman Sachs expert Jan Hatzius sees another in July rate hike follow by 0.75 percentage points.
The recent losses on the stock exchanges were accompanied by sharply rising yields on the US bond market: ten-year government bonds returned a return of just under 3.47 percent, the highest level in eleven years. In contrast, the futures contract for ten-year Treasuries (T-Note Future) fell by 0.76 percent to 114.41 points. According to observers, the danger of an economic downturn increases with rapidly and sharply rising interest rates. “Feds are being forced into a self-inflicted recession in order to contain inflation,” wrote Sean Darby, investment strategist at US Bank Jefferies.
Oracle’s shares recorded high price gains. According to the results of the final quarter of the financial year, it went up by more than ten percent. JPMorgan analyst Mark Murphy spoke of surprisingly solid growth at the fastest pace since 2011.
FedEx’s shares rose even more sharply, increasing by a good 14 percent. That was the highest daily profit since 1986. The shareholders of the US logistics group can look forward to a significantly higher dividend. The quarterly distribution is to be increased by more than half.
Boeing shares topped the Dow with a 5.4 percent premium. The aircraft manufacturer received fewer orders in May than in April. However, the share price had already collapsed by more than 40 percent in this stock market year.
Coca-Cola, the weakest stock in the Dow, lost 3.4 percent. The beverage manufacturer is postponing the IPO of its holding Coca-Cola Africa Bottler due to the strong fluctuations in the markets and the ongoing economic imponderables. Other consumer stocks, Procter & Gamble (ProcterGamble), Johnson & Johnson (JohnsonJohnson), PepsiCo and Colgate-Palmolive, showed weakness.
The euro stabilized at just over US$1.04 in late New York trading. The European Central Bank (ECB) had previously set the reference rate at 1.0452 (Monday: 1.0455) dollars; the dollar had cost 0.9568 (0.9565) euros./bek/he
— By Benjamin Krieger, dpa-AFX —