Last updated at 4:03 PM EST
Stock indices ended today’s trading session in the green after Powell’s speech. The Dow Jones Industrial Average (DJIA), the S&P 500 (SPX), and the Nasdaq 100 (NDX) gained 0.02%, 1.05% and 2.16% respectively.
The energy sector (XLE) trailed the session, losing 1.93%. Conversely, the technology sector (XLK) was the leader of the session, with a gain of 2.34%. Additionally, WTI Crude Oil fell as it hovers around the mid-range of $76 a barrel.
Additionally, the 10-year US Treasury yield fell to 3.4%, down more than 11 basis points. Similarly, the two-year Treasury yield also declined, hovering around 4.1%.
The Atlanta Federal Reserve has updated its latest GDPNow reading, allowing it to estimate real-time GDP growth. The “nowcast” becomes more accurate as more economic data is released throughout the quarter. Currently, it estimates that the economy will grow about 0.7% in the first quarter.
This is unchanged from its previous estimate of 0.7%, which can be attributed to recent releases from the US Census Bureau and the Institute for Supply Management’s ISM manufacturing report.
Nevertheless, inflation continues to be a problem around the world. Therefore, it will be interesting to see what real GDP growth will be and how it develops as the higher rates begin to impact the economy.
Last updated at 3:10 PM EST
Stocks jumped after the Federal Reserve raised its benchmark interest rate to 4.75%. The move was widely expected, with the central bank previously hinting that it would slow the pace of its interest hikes.
However, while some investors may see this as a bullish sign after becoming accustomed to larger rate hikes, it is important to remember that the Federal Reserve continues to tighten financial conditions. This means that the economy will slow down.
Indeed, it is widely accepted that monetary policy has a lag of six to 12 months before having an impact on the overall economy. This means that the increasing number of layoffs is the result of the interest rate situation in mid-2022. Additionally, it should be noted that the Federal Reserve plans to hold higher rates for some time once they peak.
Last Updated: 12:00 PM EST
Stocks are in the red midway through today’s trading session as investors awaited the Fed’s big move on an interest rate hike. As of 12:00 p.m. EST, the Dow Jones Industrial Average, S&P 500 and Nasdaq 100 are down 0.9%, 0.5% and 0.3%, respectively.
Earlier today, the Institute for Supply Management released its monthly report for the ISM Manufacturing Purchasing Managers Index, which measures the month-to-month change in production levels. A number above 50 represents expansion, while anything below 50 signifies contraction. The report came in at 47.4, which was lower than the expected 48.
It should be noted that this indicator is below last month’s reading of 48.4 and has been slowly declining since its peak in April 2021, when it hit a high of 64.7.
Additionally, the Bureau of Labor Statistics released its JOLTS Job Openings report, which helps measure job vacancies in the United States.
Although below the peak of 11.855 million, job openings are still near their highs. Nonetheless, job vacancies are down overall, and it will be interesting to see if this trend continues as rates continue to rise as growth slows.
Also, it is important to remember that this data is for December, which makes it a lagging indicator. Since then, many companies have announced that they will reduce their workforce in order to reduce costs.
Last Updated: 9:48 a.m. EST
Stocks opened in the red on Wednesday as investors awaited the Fed’s big decision on an interest rate hike.
The Dow Jones Industrial Average (DJIA) and the S&P 500 (SPX) fell slightly by 0.6% and 0.33%, respectively, while the Nasdaq 100 (NDX) was down 0.28% as of 9:48 a.m. EST Wednesday.
Separately, ADP non-farm payrolls data arrived on Wednesday and indicated that job growth continued to moderate in January. The data indicates that 106,000 jobs were added in January against a consensus of 158,000 and lower than the addition of 235,000 jobs in December.
Earnings season continued with another round of earnings announcements before markets opened. While tobacco giant Altria (NYSE: MON) delivered mixed results in the fourth quarter, telecom giant T-Mobile (NASDAQ: TMUS) reported fourth-quarter revenue below estimates.
Meanwhile, fitness platform Peloton Interactive (NASDAQ: PTON) delivered better-than-expected results as its losses narrowed in the quarter.
First published: 5:50 a.m. EST
Futures contracts on the Dow Jones Industrial Average (DJIA) and the S&P 500 (SPX) edged down 0.45%, while those of the Nasdaq 100 (NDX) were down 0.39% as of 5:50 a.m. EST Wednesday.
After ending January on a strong footing, equity futures are down on Feb. 1 as investors await the Federal Reserve’s decision on an expected interest rate hike in the afternoon of today. In January alone, the SPX gained 6.60%, the DJIA 2.87% and the NDX gained 11.53%.
Traders will also be watching the earnings of major US tech companies. Meta platforms (NASDAQ: META) reports today after market close. Also, Amazon (NASDAQ: AMZN), alphabetical (NASDAQ: GOOGL) and Apple (NASDAQ: AAPL) report tomorrow. Investors will be glued to the comments of the management of these companies to assess what the future holds for the stock market.
At the time of writing, European markets were trading slightly higher on positive European inflation news. Notably, the Eurozone headline inflation figure for January came in at 8.5%, marking a third consecutive month of reduction supported by a fall in energy prices.
Markets eagerly await Powell’s speech
The main focus for today would be the FOMC interest rate announcement and Fed Chairman Powell’s speech afterwards for any indication of future interest rate movements. Markets may have priced in a 25 basis point rate hike, but will be watching closely for any hawkish comments from Powell later. His talk will likely determine market sentiment and direction for a few days.
Asia-Pacific markets witness a mixed day
A majority of Asia-Pacific markets ended the day in the green in tandem with their US counterparts. Hong Kong’s Hang Seng Index gained 1.05%, while mainland China’s Shanghai Composite and Shenzhen Component rose 0.90% and 1.38% respectively.
Japan’s Nikkei 225 gained 0.07%, while the Topix ended the day down 0.15%.
India’s Nifty 50 index ended the day down 0.26% after witnessing a volatile trading day. On the one hand, investors applauded the new budget, on the other, traders were shocked to learn that Credit Suisse (New York Stock Exchange: CS) stopped accepting Adani Group bonds as collateral due to Hindenburg’s report on short selling.
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