(New York) The New York Stock Exchange enthusiastically celebrated the Fed’s pause in rate hikes on Thursday, ignoring its warnings of more hikes possible by the end of the year.
The Dow Jones Index gained 1.26% to 34,408.06 points and the S
“Investors look at what the Fed does rather than what it says. Actions speak louder than words,” said Jack Ablin of Cresset Capital.
On Wednesday, the US central bank left rates unchanged in the 5.00% and 5.25% range for the first time in over a year, but the Monetary Committee’s average forecast sees them rising further to 5.60 % by the end of the year, which would imply two further hikes of 25 basis points.
“I think the markets are taking this to mean that the Fed is determined not to let inflation escape on the upside and will do anything to get it under control, but at the same time they are seeing inflation moving in common sense,” noted Tom Cahill of Ventura Wealth Management.
Not only have stock market indices soared, but the dollar has fallen sharply, due to an increase in ECB rates. A decline in the greenback is generally favorable for equities.
“If you look at interest rates” in the bond market, “they’re falling,” Tom Cahill remarked again. “Not only does the stock market not believe the Fed can raise rates another two times, but neither does the bond market,” he said.
Yields on ten-year US Treasuries eased to 3.71% from 3.78% the previous day. Those at two years rose to 4.63% against 4.68%.
Investors also digested a flood of indicators on Thursday, including US retail sales for May, which rose more than expected (0.3%).
In other good news on the inflation front, import prices fell 0.6% last month.
Finally, China took steps to stimulate its economy by lowering a benchmark rate for medium-term loans and injecting liquidity into its economy.
On the values side, the eleven sectors of the S
A small wind of change blew with the very successful IPO of Cava, a fast food restaurant chain specializing in Mediterranean cuisine.
The action introduced at 22 dollars almost doubled to end at 43.78 dollars and register a valuation of 4.8 billion dollars for this brand of more than 260 restaurants, created in 2011, but not yet profitable.
Its competitor, the Sweetgreen chain, listed on the stock market in 2021, suffered (-4.22%).
The title of Goldman Sachs, in better shape during the day, compressed its progress (0.39%) after a Wall Street Journal article indicating that the Fed and the stock market policeman, the SEC, were looking into how the bank handled the file of the regional bank SVB before its bankruptcy.
Software group Adobe ended up 2.37% at $490.91 just before reporting better-than-expected second-quarter results, boosted by strong demand for cloud computing business. In electronic trading after the close, the stock still took 3.42%.
On NASDAQ, Microsoft climbed 3.19% to $348.10, with mega-cap hitting a new all-time high at nearly $2.6 trillion.
The Toronto Stock Exchange closed higher on Thursday, boosted by its energy and base metals sectors, while the major American indices also advanced.
It was the day after the Federal Reserve paused interest rates, but the central bank signaled that more hikes were likely this year in its continued fight against inflation.
“I think yesterday’s meeting, although it ended in the middle of the day, probably still served as a backdrop for today’s discussions, as people digest the news from the decision makers,” said observed Ryan Crowther, vice president and portfolio manager at Franklin Templeton Canada.
The composite index S
The widespread recovery saw the S
It wouldn’t have been surprising to see the market sell off this morning in the U.S. as investors continued to digest the news, but that’s not what happened, Crowther observed.
Instead, “the market is essentially ignoring the hawkish stance of policymakers,” he added.
“We still see a market pricing very low risk, probably in a soft landing scenario, or better than a soft landing scenario. It’s still a glass half full of what’s to come. »
Investors received a hodgepodge of economic data from the United States on Thursday. Retail sales rose last month, although economists expected a decline, while new claims for employment insurance remained high last week and a report said activity manufacturing in the mid-Atlantic region had contracted for the tenth consecutive month.
“It’s still a mixed picture in terms of economic data, but definitely leaning towards deterioration. And the inflation picture is mixed as well,” Crowther observed.
Meanwhile, in Canada, the energy sector supported the TSX as oil rose above the US$70 mark again, gaining more than 3%.
“Without that, Canada would have actually … been negative for the day,” Crowther noted.
In the forex market, the Canadian dollar traded at an average rate of 75.46 cents US, up from 75.20 cents US on Wednesday.
On the New York Commodities Exchange, crude oil rose US$2.35 to US$70.81 a barrel, while natural gas rose US$19 cents to US$2.53. million BTUs.
The price of gold rose US$1.80 to US$1970.70 per ounce and that of copper rose US3 cents to US$3.90 per pound.
