NEW YORK On Wednesday, investors in the New York Stock Exchange were relieved to react to significantly weakened inflationary pressure in the United States. The leading Dow Jones Industrial index rose 1.63 percent to 33,309.51 points. The market-wide S&P 500 index gained 2.13 percent. up to 4210.24 points The tech-laden and interest-rate sensitive Nasdaq 100 saw an even stronger increase of 2.85 percent to 13,378.32 points, now up more than 20 percent from the June low.
In the US, the pace of price growth slowed down more than expected in July. Inflation slowed to 8.5 percent. In June, inflation in the world’s largest economy was still 9.1%, the highest level in over 40 years.
According to analyst Jochen Stanzl of the CMC Markets broker, the likelihood of the Fed raising key interest rates by 0.75 percentage points in September literally collapsed after the market price data.
High interest rates tend to put stocks in a worse light compared to fixed income investments, and equity investors are adequately satisfied when interest rates go down. At the same time, fears that the Fed may slow down the economy with large interest rate hikes are weakening.
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“The market response is encouraging,” wrote Garrett Melson, portfolio strategist at Natixis Investment Managers on Wednesday. “Short-term interest rates are falling, the dollar is weakening, stocks are rising, led by the tech industry.” This is exactly what would be expected if the chances of a soft landing for the economy increased.
At Dow, Walt Disney stock was in the lead with a premium of about four percent. After the stock market closed, the entertainment group released quarterly data, after which the stocks increased significantly again after hours. The subscription figures for Disney +, the group’s streaming business, were higher than expected.
The battle to take over the Twitter short message service is entering a new round. Contrary to earlier promises, Tesla CEO Elon Musk is again selling a stake in the US electric car maker on a large scale – and he referred to the dispute over the deal with Twitter. “In a (hopefully unlikely) situation where Twitter forces the closure of the deal and the withdrawal of some equity partners, it is important to avoid a sharp sell-off of Tesla shares,” Musk tweeted. At the end of April, he wrote that no further sale of shares was planned. Tesla shares gained 3.9%, Twitter gained 3.7%.
America’s largest crypto exchange, Coinbase, has turned deep red due to the decline in the prices of digital currencies such as Bitcoin and Ether. High write-offs for investments had a significant impact. Overall, business data for the second quarter fell short of already weakened expectations. However, analysts believe that the company’s long-term prospects remain positive. In addition, there was a generally good mood for tech equities after the release of US inflation data. Shares increased by 7.4 percent.
The euro rose to the highest level since the beginning of July after the publication of US consumer prices data. After the close in New York, the exchange rate of the single currency was slightly lower and amounted to USD 1.0302. The European Central Bank (ECB) set the reference rate at 1.0252 (Tuesday: 1.0234) of the dollar, the dollar thus cost 0.9754 (0.9771) euro.
In the US bond market, prices rose after inflation data. The T-Note Future recently gained 0.17% to 119.69 points after even higher price gains were recorded at the start of trading. The yield on 10-year government bonds fell to 2.79 %./ajx/he
— Author: Achim Jungling, dpa-AFX —