The stock market indexes that describe the price development of stocks opened up on Wall Street the day after the Federal Reserve’s interest rate decision.
The S&P 500, which tracks the price development of major American stocks, was 1.5 percent higher on Thursday compared to yesterday’s closing reading. The index has broken its record number several times this year.
Now it’s the 39th time this year, information service Bloomberg tells.
It was pulled upwards especially by stocks in the technology sector. For example, someone working in the semiconductor industry Nvidian’s share was 4.8 percent, Applied Materialsin 4.3 percent and Synopsis 4.3 percent up.
Companies in the semiconductor industry have been plagued by concerns that the deterioration of the economic situation could hit the demand for artificial intelligence products.
The rapid rate cut by the Fed may quell investors’ concerns in this regard, as a lower interest rate will support economic development. For example, it is easier to make investments when the price of borrowed money is at a lower level.
Investors chewed on the Fed’s decision
The Dow Jones, which follows the 30 largest companies, was up 1.1 percent, and the Nasdaq, which focuses on shares of companies in the technology sector, was up 2.3 percent.
Yesterday, the stock indices continued their gentle rise, when the Fed announced that it would lower the key interest rate by 0.50 percentage points to a range of 4.75-5.00 percent. The interest rate cut was the first since spring 2020.
Governor of the Central Bank Jerome Powellin after the press conference, the index describing the price development of the shares ended in a gentle decline.
Investors have been chewed on the decision and accompanying material for a longer time today. Stock markets in Asia and Europe were on the rise on Thursday.
“It bodes well for the riskiest asset classes”
“The Fed delivered a very dovish key rate cut. This bodes well for the riskiest asset classes,” Brown Brothers Harrimanin market strategist Elias Haddad commented the news agency for Reuters.
In central bank slang, a dove refers to a central banker who favors lower interest rates to support the economy. The hawks, on the other hand, prefer a tighter interest rate due to inflation concerns.
The median of central bank managers believes that the interest rate should be lowered by another 0.50 percentage point during the rest of the year. The Fed has meetings in November and December this year.
According to the market overview of information service Bloomberg, investors now hope that the Fed will bring about a “soft landing”, i.e. the economy will not experience a recession.
Today, employment figures were received from the United States. Last week, fewer unemployment compensation applications were filed than the week before, and the number of compensation applications fell short of economists’ forecasts.
Source: www.arvopaperi.fi
