ROUNDUP/Equities New York Conclusion: Investors take Fed interest rate signals calmly

NEW YORK (dpa-AFX) – Investors on the New York stock exchanges have taken the interest rate decision by the US Federal Reserve with some composure. As hoped and widely expected, monetary authorities took a pause in their rate hike cycle on Wednesday. At the same time, however, they signaled further interest rate hikes for the current year.

The leading index Dow Jones Industrial (Dow Jones 30 Industrial), which was already weakening beforehand, extended its loss to almost 1.3 percent, but was then able to recover somewhat. At the end of trading, the price boards were still down 0.68 percent to 33,979.33 points. The other indices, which were already friendly before the Fed statements, held up better. The market-wide S&P 500 ultimately claimed a gain of 0.08 percent to 4372.59 points, while the tech-select index NASDAQ 100 ended up even gaining 0.70 percent to 15,005.69 points, higher than before the interest rate decision.

Thomas Altmann from the asset manager QC Partners called the interest rate break after ten increases in a row “at least a small turning point”. However, this break is likely to remain, “because the Fed leaves the door for further hikes more than a crack wide open”. The new interest rate projections showed that the monetary watchdogs expected two more rate hikes on average by the end of the year. Overall, this is a disappointment for the stock exchange, as very few investors would have expected it. “This should make it clear to everyone that interest rate cuts will not be on the agenda until next year.”

After all, the Fed is now expecting a slightly lower inflation rate than in March, but expects core inflation to be slightly higher than before, excluding volatile food and energy prices. In addition, the currency watchdogs were more optimistic than before about economic growth.

In a strategy study, the experts at Deutsche Bank now assess the topic of artificial intelligence (AI) as a possible source of new growth. They forecast a level of 4500 points for the S&P 500 at the end of the year, which means that they believe it will increase by around 17 percent in total in 2023 – so far it has posted a price gain of almost 14 percent. Overall, however, the experts are more cautious about the prospects for technology stocks that have performed well and are more likely to focus on financial and consumer stocks that have already priced in a recession.

AI is also keeping AMD (AMD (Advanced Micro Devices) ) shareholders busy, after the processor and chip manufacturer shed light on its position within the new megatrend at an investor event the day before. Shares had turned abruptly on Tuesday after an initial high since January 2022 but recovered 2.3 percent. Analysts commented positively on the event. AMD has recognized that the “one-solution-for-all” approach does not meet the requirements, according to Goldman Sachs.

The fact that the health insurer UnitedHealth warned of significantly increasing medical costs for the current quarter caused its shares to drop by 6.4 percent at the end of the Dow. The shares of industry peers CVS Health and Humana suffered, falling 7.8 and 11.2 percent, respectively.

Meanwhile, the shares in the liquid gas specialist NextDecade (Harmony Merger) jumped in price by 51 percent. They benefited from the entry of French oil giant TotalEnergies. Its shares gave way in Paris.

The euro also suffered only moderately from the Fed’s statements and most recently cost 1.0834 US dollars. The European Central Bank had set the reference rate at 1.0809 (Tuesday: 1.0793) US dollars and the dollar thus cost 0.9252 (0.9265) euros.

US Treasuries reined in their gains somewhat after the interest rate decision. The futures contract for ten-year bonds (T-Note Future) last claimed a plus of 0.21 percent to 112.91 points. In return, the return on the paper fell to 3.80 percent./gl/men

— By Gerold Löhle, dpa-AFX —

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