On persistently uncertain terrain, the US stock exchanges made up ground on Thursday. Trading is influenced by recently published economic data, which are below expectations. With regard to the Fed’s interest rate policy, this provides some peace of mind for investors.
After two days of losses, the US stock exchanges closed with significant premiums on Thursday and recovered from the initial losses. Trading continued to be characterized by a very volatile environment. The Dow Jones index closed 1.3 percent higher at 33,249 points, the S
Recently, good US economic data had reinforced fears that the US Federal Reserve would stick to its tight monetary policy in order to curb high inflation. In addition, the Federal Reserve officially began shrinking its nearly $9 trillion balance sheet on Wednesday. US Federal Reserve Deputy Chairwoman Lael Brainard expects the central bank to hike interest rates by half a percentage point at its meeting later this month and again in July. However, it is still too early to say whether the Fed will slow down the rate hikes thereafter, said the central banker. It is premature to say that inflation has peaked, Brainard said.
On the economic side, the ADP private sector jobs report for May came in below expectations. Only 128,000 new jobs were created here, while the estimate was 299,000. It is used as an indicator for the official US job market report on Friday. This should show that the job engine in the USA is still running at full speed. Weekly initial claims were broadly in line with expectations.
New orders in US industry rose less in April than economists had expected. Meanwhile, non-farm productivity for the first quarter came in slightly better-than-expected on the second reading versus the previous quarter.
Prices rose on the oil market, but were volatile. The price of a barrel of the WTI variety increased by 1.8 percent, the Brent price was 1.4 percent higher. The oil cartel Opec and its allies have agreed to increase production. Opec officials said the group plans to expand production in July and August by more than expected, by 648,000 barrels a day. According to one observer, however, there is an expectation on the market that demand will continue to exceed supply despite the increased funding. Meanwhile, US crude inventories have fallen more than forecast. They fell 5.068 million barrels from the previous week, according to the state’s Energy Information Administration (EIA).
The dollar gave back much of the previous day’s gains. The dollar index fell 0.7 percent. Dollar selling spurts on signs of a slowing U.S. economy or speculation of a slowdown in rate hikes by the U.S. Federal Reserve should be short-lived due to the currency’s “safe-haven qualities,” said Jane Foley, head of FX strategy Rabobank. Although Rabobank expects the US economy to slide into recession next year, the dollar should continue to find support.
Yields on the bond market increased slightly after the recent significant rises. The 10-year yield was up 0.4 basis points at 2.92 percent. The price of a troy ounce of gold benefited from the weaker dollar and rose by 1.3 percent.
Microsoft gained 0.8 percent, recovering from initial losses. The group has lowered its fourth-quarter revenue and earnings guidance, citing unfavorable exchange rates as the stronger US dollar takes its toll. The company now expects revenue of $51.94 billion to $52.74 billion, up from $52.4 billion to $53.2 billion previously. Earnings are expected to be between $2.24 and $2.32 per share versus the previous guidance of $2.28 to $2.35 per share.
Hewlett Packard Enterprise shares lost 5.2 percent. The company lowered its full-year guidance due to the impact of supply shortages, negative currency effects and the pullout from Russia.
Gamestop increased by 10.4 percent. The retail chain for entertainment software reported a higher loss than the market had expected, but sales were a tad higher than forecast.
