Wall Street sentiment remains subdued a day after the US Federal Reserve rate hike. Investors have reconsidered the decision. The Dow Jones index closed 0.4 percent lower.
After the significant losses the previous day following the interest rate decision by the US Federal Reserve, Wall Street has shown itself to be lighter. The indices were volatile, which reflects the fragile mood, as participants said. Government bonds have meanwhile been sold off sharply. The Dow Jones index closed 0.4 percent lower at 30,077 points, the S
Investors reconsidered the interest rate decision and the accompanying statements. While the 75 basis point rate hike came in as expected, the Fed has made it clear that it will prioritize fighting inflation at the expense of economic growth. In addition, other central banks also continued to tighten interest rates. The Bank of England and the Swiss National Bank also increased interest rates on the reporting date. Fed Chair Jerome Powell reiterated that pain is inevitable and significantly downgraded forecasts for economic growth.
At the end of the year, the US Federal Reserve wants to see the key interest rate at an unexpectedly high 4.25 to 4.5 percent. This increases the existing risk of a recession, it said. Because the other central banks are also continuing to tighten interest rates. The Bank of England and the Swiss National Bank also increased interest rates on the reporting date. "That was really the first intimation from Powell that this would come with significant economic issues," said Laura Cooper, Blackrock's macro strategist. "We expect the US to enter a recession, probably in the first half of next year." Bond Yields and Dollar Rise Yields on the bond market went up massively due to inflation concerns and the Fed's increased interest rate projections the day before. This time the plus was higher at the long end of the market.
The 10-year yield climbed a whopping 17.2 basis points to 3.70 percent. The dollar was firmer after rising earlier on Wednesday in response to the US Federal Reserve's more hawkish-than-expected interest rate forecast. The dollar index gained 0.6 percent. For currency analyst Ulrich Leuchtmann from Commerzbank, the US Federal Reserve has not delivered any new dollar-positive arguments. But overall, the Fed's statements justified the current dollar strength. Oil prices rose after the previous day's sales. The expectation that there could be delivery problems from the Russian side was supported here. In addition, the Bank of England's interest rate hike was lower than some had expected. The price of gold fell 0.1 percent, which traders mainly attributed to gains in the dollar.
In terms of individual values, the shares of H.B. Fuller up 3 percent. Although the adhesives manufacturer increased its net profit and sales in the third quarter, both key figures fell short of expectations. However, the fact that the company raised the lower end of the profit range for the full-year expected result had a supportive effect. The house builder KB Home (-5.1%) also did better than estimated on the earnings side, but missed the expected turnover despite a 26 percent increase. In addition, KB Home announced that net orders had halved in the quarter under review due to higher mortgage rates, inflation and agricultural pressure. FedEx increased by 0.8 percent. The company said it is raising its tariffs in a tougher environment, targeting billions of dollars in savings.
