The New York Stock Exchange paradoxically celebrated the sharp rise in interest rates by half a percent announced by the US Federal Reserve on Wednesday, as it precludes a more serious increase at the moment. According to the final results at the close, the Dow Jones rose 2.81% to 34,061.06 points. The technology-dominated Nasdaq rose 3.19% to 12,964.86 points, while the S&P 500 rose 2.99% to 4,300.17 points.
“It’s a party on Wall Street, bond yields are falling. After all, the Federal Reserve was not such a hawk. “commented Joe Manimbo of Western Union. “This is reflected in the fact that the Fed seems to rule out an increase of 0.75 percentage points.” in the future, the analyst said. Even if he approved a 50-point increase in key rates as expected by markets – the first in more than 20 years – the Monetary Committee (FOMC) seems more cautious about the possibility of a more serious increase of 75 basis points, which investors feared. Raising the rate by 0.75 percentage points “not considered firm”This was stated by Fed Chairman Jerome Powell at a press conference after the announcement of the committee’s decision. Thus, overnight rates are fixed at 0.75% to 1%, but then increase by 0.50% “on the table for the next two meetings”in June and July, said Jerome Powell.
“This raises questions for September, we will have to look at the data if inflation is moderate”, suggested an analyst at Western Union. The Fed’s balance sheet will also begin to shrink at $ 47.5 billion a month from June 1 to $ 90 billion in three months, which is another way to raise the cost of credit to curb demand and increase prices. Bond yields declined significantly: on two-year bills fell to 2.63% against 2.78% the day before. Yields on ten-year treasury bills fell to 2.92% from 3% at the beginning of the session. Eleven S&P sectors finished at a high level, starting with energy (+ 4.11%), while oil prices jumped by more than 5%, followed by communications services (+3, 68%) and information technology (+ 3.51%). Airbnb’s rental platform jumped 7.71% to $ 156.18. It raised its sales forecast for the second quarter and managed to sharply reduce losses in the first.
Starbucks rose 9.83% to $ 81.64. The American coffee giant managed to compensate for the sharp slowdown in its activity in China in the first quarter by growth in the United States, where it wants to strengthen the development of “drive-in” outlets where customers are served in their vehicle. The title of Covid vaccine manufacturer, Moderna, rose 5.81% to $ 155.05. The lab said quarterly profits were higher than expected with sales of its $ 5.93 billion vaccine against Covid, its only product. Uber, a car rental company with a driver and food delivery specialist, lost 4.65% to $ 28.10, despite doubling turnover in the first quarter, driven by rising prices. Uber is still losing money, but is betting on continued growth in the second quarter. The title also pulled down due to the fall of its rival Lyft, which fell 29.91% to $ 21.56. The group recorded a larger-than-expected loss in the first quarter and said it had to invest more to increase its fleet of drivers.