Stock markets: Wall Street under pressure according to Powell and Yellen

Stock markets: Wall Street under pressure according to Powell and Yellen

The small interest rate hike by the US Federal Reserve caused the mood on the stock exchange to tilt towards the end of trading.

Disappointed hopes regarding interest rate policy and statements by US Treasury Secretary Janet Yellen have put pressure on stock markets in the US.

After the most important indices initially hardly reacted to the US Federal Reserve’s small interest rate hike of 0.25 percentage points, which turned out to be as expected, the mood changed towards the end of trading. Fed Chairman Jerome Powell threw a spanner in the works for all those who had already bet on an end to interest rate hikes or even rate cuts this year in view of the turbulence at some regional banks. In the US Senate, Yellen also said that “blanket” deposit insurance to stabilize the banking system was not an issue.

The Dow Jones Industrial closed at minus 1.63 percent to 32,030.11 points, just above its daily low reached just before. The market-wide S&P 500 lost 1.65 percent to 3936.97 points. The Nasdaq 100, which is predominantly stocked with technology stocks, ultimately fell by 1.37 percent to 12,567.15 points after a largely friendly development.

The Fed still expects a base rate of 5.1 percent at the end of the year. An easing should then follow in 2024, but not as much as previously expected. However, Powell also made it clear that interest rates could be raised further if this were to be necessary. This, as well as Yellen’s statements, which were released around the same time, put pressure on the US stock exchanges, it said.

Shares in regional banks fell

According to the Finance Minister, shares in regional banks in particular fell. The shares of the First Republic Bank, which had started to recover the day before after a mostly steep decline since the beginning of March, lost 15.5 percent.

The papers of the regional bank PacWest Bancorp fell by a little more than 17 percent. The bank holding had previously informed about a 20 percent outflow of customer deposits and also about not wanting to increase capital. Instead, she received $1.4 billion in cash from global investment firm Atlas SP Partners. The move gives PacWest time to stabilize its finances, wrote RBC analyst Jon Arfstrom.

The shares of the New York Community Bancorp lost almost 5 percent and in the S&P 100 Capital One Financial, Wells Fargo and the shares of the US Bancorp fell noticeably. The papers of the big banks such as those of JPMorgan or Goldman Sachs in the Dow also gave way.

However, the shares of Nike remained at the bottom of the leading US index with a minus of almost 5 percent. The sporting goods manufacturer had only presented mixed quarterly figures and given a cautious outlook.

Nvidia papers are in the plus

On the other hand, the Nvidia stocks on the Nasdaq were up one percent. After an event focused on artificial intelligence the day before, numerous positive analyst comments followed. For example, Credit Suisse analyst Chris Caso referred to the visionary character of management’s statements and was enthusiastic about the company’s intention to make more and more money with software.

Among the smaller values, the shares of Gamestop, which have already been volatile in the past, came into focus again. They skyrocketed by around 35 percent. The video game retailer wowed with its first quarterly profit in two years.

The euro appreciated and last traded at $1.0860. The European Central Bank had previously set the reference rate in Frankfurt at 1.0785 (Tuesday: 1.0776) dollars. The dollar thus cost 0.9272 (0.9280) euros. On the US bond market, the futures contract for ten-year government bonds (T-Note Future) rose by 1.11 percent to 115.41 points after a weaker start. In contrast, the yield on ten-year government bonds fell to 3.449 percent.

Source: Stern

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