Wall Street clearly in the plus
US investors hope for interest rate pause
04/13/2023 10:44 p.m
Hopes are blooming on Wall Street that the Fed could pause interest rates. Pleasing economic data are sending US technology stocks in particular on a recovery course. Apple plans to relocate to Thailand, which investors like.
Wall Street extended their premiums into the evening. Producer prices had shown the most significant decline in around three years, while economists had expected an unchanged level. As a result, speculation grew that the US Federal Reserve might ease off its interest rate hikes. Weekly initial jobless claims rose a little more than expected, having generally been pointing up for some time. After the minutes of the Fed’s meeting the day before brought a possible recession into play, the weekly labor market data also spoke for easing interest rate concerns – and thus played into the stock market’s hands.
The Dow-Jones-Index gained 1.1 percent to 34,030 points, S&P-500 and Nasdaq-Composite increased by 1.3 and 2.0 percent respectively. On the Nyse, 2,101 (Wednesday: 1,372) price winners were counted and 885 (1,627) losers. 102 (116) titles closed unchanged. Investors interpreted the recession signals from the data as evidence that the Fed may soon cut interest rates again.
“Inflation fears appear to be playing second fiddle to worries that the economy is nearing a recession as today’s producer prices show a slowdown in demand for manufactured goods, while jobless claims data point to a labor market cooling further ‘ said Interactive Brokers economist Jose Torres, explaining the stock market’s positive reaction.
Dollar remains weak
The dollar, which continued to weaken, fit into the picture of waning interest rate hike speculation, with the dollar index losing 0.5 percent. The euro rose to $1.1050 on the dollar weakness after exchange rates fell below the previous night’s 1.10 mark. Unicredit currency analysts pointed to the diverging interest rate outlook in the US and the euro zone.
The slightly lower government bond prices did not fit into the picture, and yields rose slightly as a result. However, these had already given way with consumer prices the day before. Gold benefited from the weaker dollar and the prospect of an end to interest rate hikes. The price of the precious metal climbed to an all-year high. One analyst spoke of an actually “upside-down world” in which low inflation supports the price of gold.
Oil became cheaper. Investors weighed between tight supply and the risks of a US recession, with the latter prevailing. The OPEC cartel had meanwhile confirmed its forecast for growth in global oil demand in the current year.
Delta at a loss
Delta Air Lines made a loss in the first quarter. The stock lost 1.1 percent. Apple were up 3.4 percent. The company is in talks with suppliers about moving MacBook production to Thailand – another move to distance itself from China amid the country’s tensions with the US.
Merck increased by 1.7 percent. Citi analysts upgraded the rating to “buy”. For the share of Harley-Davidson was down 1.7 percent. The motorcycle manufacturer announced that CFO Gina Goetter is leaving the company after less than three years. She is moving to Hasbro in the same capacity. Their shares gained 2.6 percent.
Sarepta Therapeutics stocks fell 9.4 percent. According to a report, investigators from the US health authority FDA want to refuse the approval application for Sarepta’s gene therapy. The papers from Sportsman’s Warehouse Holdings buckle by 13.2 percent. The sporting goods retailer is forecasting a sharp drop in sales and an unexpected loss for the current quarter.