Stock Market: Wall Street welcomes Fed’s determination

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market reviews. The New York Stock Exchange welcomed with satisfaction the US central bank’s determination to curb inflation by sharply raising key interest rates on Wednesday.

To re-consult market news

Stock market indices at close

in Toronto, a S&P / TSX It collected 63.05 points (+0.32%) at 19611.56 points.

in New York, a S & P500 It advanced 54.51 points (+1.46%) to 3789.99 points.

The Nasdaq It rose 270.81 points (+2.50%) to 11099.15 points.

The daw It advanced 303.70 points (+1.00%) to 30668.53 points.

The almost It closed higher at $0.0037 (+0.4748%) at $0.7757.

The oil It fell $2.82 (-2.37%) to $116.11.

He went From $23.40 (+1.29%) to $1,836.90.

The Bitcoin It fell 198.37 USD (-0.90%) to 21806.58 USD.

Context

At the end of its monetary committee meeting, the Fed raised its key rates by 75 basis points, to put them in a range of 1.50% to 1.75%. This is the strongest monetary tightening since 1994.

“The Fed stressed the seriousness of its mission by raising interest rates by 75 basis points for the first time since 1994, moving quickly in anticipation of higher inflation,” said Chris Low, chief economist at FHN Financial.

“This time, for the first time in years, the Fed is trying to reverse inflation that is already well above its target,” the analyst added.

For Peter Cardillo of Spartan Capital, “The Fed spoke out aggressively and the market liked that.” “While the bear market will continue for a while, it has responded positively and bond yields are down after a sharp rally earlier in the week,” the analyst said.

Yields on 10-year US government bonds, which are moving opposite their price, fell to 3.29% from 3.47% the day before, the highest level since 2011.

Inflation peaked at 8.6% year-on-year in the US, and Jerome Powell, Federal Reserve Chairman, confirmed that the central bank was “committed to bringing inflation back to close to the 2% target.”

Hard landing or soft landing?

Federal Reserve Chairman Jerome Powell emphasized in his press conference that “the economy remains strong and believes that it can achieve a smooth landing by shrinking the Fed’s balance sheet and raising interest rates,” Peter Cardillo said.

“Personally, I doubt it, I think we are heading for a fairly sharp downturn,” the analyst said, referring to a slowdown in the economy that monetary authorities are seeking to cool price hikes.

Inflation peaked at 8.6% y/y in the US and Jerome Powell confirmed that the central bank is “committed to bringing inflation back to close to the 2% target”.

Tom Cahill of Ventura Wealth Management believes that it will be difficult to orchestrate a smooth landing, that is, avoiding a recession or high unemployment.

But he said the market appreciated the fact that the Fed remains open to “a 50bp or 75bp rate hike at the next meeting in July”. “This option is welcome, as the market fears the Fed is overdoing it.”

Yields on 10-year US government bonds, which move opposite their price, responded positively, falling to 3.29% from 3.47% the day before, the highest level since 2011.

The dollar weakened slightly after it jumped to a 20-year high on Tuesday. The dollar index, which compares the US currency to a basket of other currencies, fell 0.77% to 104.70 points. Against the euro, it was equal to 1.0453 US dollars per euro (-0.34%).

For its part, which is an extremely rare fact, the European Central Bank (ECB) held an emergency meeting earlier in order to calm tensions over the differentials in borrowing rates between eurozone countries.

Today’s indicators continued to reflect the US economy, which has been shocked by rising prices and crippled by supply chain bottlenecks.

Contrary to analyst expectations, US retail sales in May fell by 0.3%, while consumer purchasing power fell sharply.

As for manufacturing activity in the New York area, as measured by the Federal Reserve’s Empire State Index, it remained in contraction in June.

Investors fled cryptocurrency and bitcoin, a risky asset, which fell to $21,566 (-1.82%).

All S&P 500 sectors recovered, excluding energy, and consumer discretionary spending in the lead (+3.02%), followed by telecom (+2.36%) and real estate (+2.33%).

A number of titles rebounded strongly, especially in distribution, which had fallen sharply at the beginning of the week, such as the online car seller Carvana (Kafna) (+16.78%) or animal food chewing (CHWY) (+8.10%). Car rental company Hertz (HTZ)which announced the buyback of its shares for 2 billion US dollars, rose 5.05% whilenotice (car)on the eve of the holiday, it accelerated by 7.94%.

vaccine maker Moderna (Mrna) Welcomed (+5.73% to $128.53) after taking a decisive step towards vaccinating infants and young children against Covid-19, with a favorable recommendation from experts to obtain a license for its serum additionally from Pfizer (PFE) (+1.23% to $48.51 USD).



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