After the inflation shock and high price losses the day before, the US stock exchanges stabilized again on Wednesday. In view of the expected interest rate hike, however, investors are still acting cautiously. An impending railroad strike is also causing unrest.
Price data welcomed with relief eases selling pressure on Wall Street. The US standard value index Dow Jones closed 0.1 percent higher on Wednesday at 31,135 points. The tech-heavy Nasdaq advanced 0.7 percent to 11,719 points. The broad S
“Pretty much anything is welcome after yesterday’s sell-off,” said Hugh Johnson, chief economist at research house Hugh Johnson Economics. This can be seen in the producer prices, which are largely in line with expectations. Their increase narrowed to 8.7 from 9.8 percent year-on-year. Nevertheless, a large number of investors continue to expect that the Fed will not only raise the key interest rate by three-quarters of a percentage point, as previously expected, but by a full percentage point in the coming week. “That’s plausible, if not probable,” said Mark Luschini, chief investment strategist at wealth manager Janney Montgomery Scott.
At the same time, he is counting on the US Federal Reserve not losing sight of the slowdown in the economy in its fight against inflation. Against this background, lower-interest government bonds that were already being traded flew out of the depots. Shorter-dated securities were hit particularly hard. This pushed the yield on two-year US bonds to a 15-year high of 3.834 percent at times. The interest rate hike speculation also hit the industrial metals. Copper fell by one percent to $7,801 a ton. “The US is raising interest rates faster than other countries,” said analyst Nitesh Shah from fund provider WisdomTree. “This will add upward pressure on the dollar. All commodities traded in dollars will suffer.”
On the stock market, investors withdrew from railroad operators such as Union Pacific and CSX. Its shares fell by up to 3.7 percent because of an impending strike. The companies have until one minute past midnight on Friday to come to an agreement with three unions. A shutdown could bring nearly 30 percent of US freight transportation to a halt. Experts estimate the economic damage caused by a strike at around two billion dollars a day.
This gave the US natural gas future a price jump of six percent to $8.781 per million BTU. A walkout could affect coal supplies to power plants, requiring more electricity from gas-fired power plants. Gas producers such as Fortress, Tellurian, Cheniere and NextDecade benefited from this. Their shares advanced up to almost five percent. Starbucks shares also rose, rising 5.5 percent. The coffee house chain wants to increase profits annually by 15 to 20 instead of ten to twelve percent over the next three years. Thanks to the US business stimulus program and ambitious growth plans in China, the new targets seemed realistic, commented analyst Andrew Charles of wealth manager Cowen.
