The US Federal Reserve is raising interest rates by a moderate 0.25 points because of the weakening inflation. This step and the subsequent press conference by Fed Chairman Powell calmed tempers on Wall Street. This benefits the Nasdaq and the S
US investors have drawn hope from the words of US Federal Reserve Chairman Jerome Powell on further interest rate policy. As expected, the Fed raised the key monetary rate by 0.25 percent during trading on Wall Street. The most important indices trended weaker immediately afterwards. However, they then increased during Powell's press conference.
Analysts pointed out that Powell confirmed that inflation was falling. "He could have said that the markets were overly nervous and he didn't take the opportunity to do so," said Edward Jones investment strategist Angelo Kourkafas. Instead, Powell explained that a large amount of tightening had already taken place. The Dow Jones ended up stagnating at 34,093 points. The tech-heavy Nasdaq, meanwhile, was up 2 percent to 11,816 and the broad-based S
Recent signals from the US labor market point to the Fed's successes in the fight against inflation. According to data from the personnel service provider ADP, only 106,000 jobs were created in January. Experts had expected private sector jobs to rise by 178,000 after a revised 253,000 in December. "What you're seeing here is an abrupt drop in hiring, which means the Fed is succeeding in what it set out to do - create elevated unemployment and reduce demand, which will effectively lower inflation." said Thomas Hayes, chairman of investment firm Great Hill Capital.
The euro was up 1.2 percent to $1.0986 by the close in the US. Expectations that the ECB will tighten interest rates more than the Fed this year gave the common currency a boost. The decision on the ECB's next step is due on Thursday. Rising interest rates make investments in the euro zone more attractive for international investors. Inflation in the euro area fell more-than-expected to 8.5 percent in January, while the unemployment rate remained at 6.6 percent in December.
In the US chips sector, AMD lifted sentiment with an outlook for better business in the second half of the year. The papers closed 12.6 percent in the plus. The titles of the Snapchat operator Snap, on the other hand, collapsed by 10.3 percent after a sales decline threatened for the first time in the first quarter. The biotech company Amgen also fell short of stock marketers' expectations with its sales forecast for 2023. The shares fell by almost 2.4 percent.
Investors also reacted with shock to a forecast reduction at Electronic Arts. The US group plans to release some of its video games at a later date, which should have a negative impact on net bookings. Shares fell 9.2 percent. The energy sector came under pressure in the wake of falling oil prices. After US inventories swelled more than expected, the price of the North Sea variety Brent fell by 2.5 percent.