Dow Jones closes in positive territory: Cautious optimism is spreading on Wall Street

The Fed minutes reveal that the monetary watchdogs no longer see a need to continue their rigid interest rate policy.

Dow Jones closes in positive territory: Cautious optimism is spreading on Wall Street

The Fed minutes reveal that the monetary watchdogs no longer see a need to continue their rigid interest rate policy. They could slow the pace of rate hikes to a quarter-point in February. Investors on Wall Street breathe a sigh of relief.

Investors on Wall Street are cautiously optimistic following the release of minutes from the US Federal Reserve's December meeting. The Dow Jones index of standard values ​​rose by 0.4 percent to 33,270 points. The broader S

The US Federal Reserve is signaling a slower pace of monetary tightening in 2023 after a series of aggressive rate hikes to fight inflation. As can be seen from the minutes of the December meeting, the monetary watchdogs see "considerable progress" in curbing inflation as a result of their tight interest rate policy last year.

The task now is to balance the fight against high inflation and the risk of an excessive economic slowdown. According to most monetary authorities, "flexibility and optionality" are required on the way to an even more dampening course for the economy: This suggests that the pace of interest rate hikes at the Fed meeting in early February could be curbed - to a quarter of a percentage point.

US Treasury bonds were buoyed by hopes that the Fed would end its XXL rate hikes. Portfolio manager Dickie Hodges from the investment bank Nomura considers the prospects for the bond markets in the new year to be "almost consistently positive". In the short term, the upward trend will probably be interrupted for the time being. The major central banks would still have to deal with unacceptably high inflation. "But the need to keep raising rates will soon be gone. And when the Federal Reserve finally tells us it has stopped raising rates, the rally in bond markets will be truly sustainable."

Falling bond yields helped tech stocks like Netflix, Apple and graphics card maker Nvidia gain between 4.9 percent and 1.03 percent and 3.03 percent, respectively. According to experts, rising inflation and higher interest rates will devalue future profits for high-growth tech companies. Meanwhile, hopes for a long-term recovery from the recent coronavirus outbreak in China supported shares in US-listed Chinese companies. The courses of the tech companies Alibaba, JD.com and Baidu rose by up to 14.68 percent. The China optimism also inspired the coffee house chain Starbucks. The coffee maker's shares rose 3.6 percent to $104.46.

The spin-off of the medical technology business has paid off for the shareholders of the US conglomerate General Electric (GE). GE HealthCare shares rose nearly 6 percent to $70.16 on their first day of trading. GE shares also gained 3.8 percent. At the same time, Microsoft lost 4.37 percent to $229.1.