LAST UPDATE: 21.30
A mixed picture on Wall Street on Thursday, with investors evaluating a number of financial data released today in the US and weighing the monetary policy decisions of other powerful central banks in the world, a day after the announcement by the Federal Reserve that it is speeding up the termination of the extraordinary asset purchase program and that it will increase its interest rates in 2022.
Today, the Dow Jones is continuing at a profit, the Nasdaq is experiencing heavy losses and the S&P 500, although it started the session at a record high, then fell to negative territory.
The US Federal Reserve’s decisions eliminated one of the uncertainties that “burdened” the investment mood in the past, namely what it intended to do with interest rates. Fed officials are “seeing” even three interest rate hikes, up 25 basis points at a time. by the end of 2022, with the reference rate increasing to 0.90%. Interest rate hikes are expected to continue in 2023, raising the interest rate to 1.6% and then to 2.1% in 2024, in order to curb inflation and return close to the 2% target set by the Federal Reserve.
As for the reduction of the bond buying program, which started last year, in order to support the American economy in the midst of a pandemic, according to the new plan, it is expected to be completed in March 2022, instead of the originally planned June.
At the forefront of central banks on the European Atlantic coast, the European Central Bank, faced with a strong rally in inflation in recent months, decides to further slow down bond markets in the Pandemic Emergency Program (PEPP), with the central bank announcing at the same time and officially that it will stop net purchases under PEPP at the end of March 2022.
At the same time, the ECB kept its interest rates unchanged, announcing that the interest rates on major refinancing operations as well as the marginal lending facility and the deposit facility would remain at 0.00%, 0.25% and -0.50% respectively. .
Surprise move by the Bank of England, which decided to raise its key interest rate to 0.25% as inflationary pressures intensify in Britain. Most economists expected the BoE to keep interest rates at 0.1% due to the new rise in cases. However, the Bank of England’s 9-member monetary policy committee voted 8-1 in favor of raising interest rates.
“Shares fell despite the fact that the Fed not only confirmed the acceleration of tapering, but also the possibility of proceeding with 3 interest rate hikes in 2022 and another 3 in 2023, hoping to bring the key interest rate to inflation levels,” he said. note by Louis Navellier, founder of Navellier & Associates. “Subsequently, the United Kingdom raised interest rates, while the ECB confirmed that it did not intend to raise them in 2022. This is a mixed climate of inflationary uncertainty over central bank monetary support.”
Back to the US and the financial data of the day, New unemployment benefit applications rose last week, a development that probably reflects the peculiarity of the period with the temporary recruitments due to the festive period, however remaining close to the lowest level of the last 52 years.
In particular, initial unemployment benefit applications rose by 18,000 to the seasonally adjusted 206,000 for the week ended Dec. 11, according to data released by the Labor Department on Thursday. Last week they had dropped to 188,000 initial applications.
His performance 10-year US government bond is currently growing marginally at 1.47%, while dollar declines by 0.5% according to the ICE US Dollar index, following the decisions of the ECB.
Indicators – Statistics
On the dashboard, the industrial index Dow Jones marks an increase of 0.15% to 35,980 points, the widest S&P 500 loses 0.7% at 4,676 points, and o Nasdaq falls by 2.35% to 15,200 points.
From 30 shares that make up the industrial index, 22 are moving with a positive sign and 8 with a negative one. Verizon (+ 3.77%), Travelers Cos (+ 2.6%) and IBM (+ 2.42%) are leading the gains, while Apple (-3.39%), Salesforce (- 2.74) and Microsoft (-2.56%).
Lennar announced its earnings growth on Wednesday, but below expectations, in a news that could jeopardize the recent rally of home builders. Its share is trading at a loss of 4.24%.
Biogen’s share is in the spotlight after the company announced plans to submit to the U.S. regulators in March the protocol for a Phase 4 confirmatory study on its Alzheimer’s drug. Its share adds 1.52% today.
In corporate news, Rubicon, a cloud-based waste and recycling platform operator, will be listed on the Stock Exchange through a merger with SPAC FOUN, in a deal with a fictitious pro forma business worth $ 1.7 billion.
Genuine Parts Company GPC announced on Thursday that the unit of Motion Industries Inc. will pay about $ 1.3 billion for Kaman Distribution Group, an industrial power distribution, automation and liquidity distributor with 1,700 employees founded in 1971.
Macro
In others macro of the day, US industrial production increased in November, driven by improvements in the manufacturing and mining sectors, including oil production, according to data released by the Federal Reserve. Specifically, industrial production increased by 0.5% last month.
Meanwhile, Philadelphia manufacturing fell more than expected in December, according to data released today by the Federal Reserve of Philadelphia.
In particular, the Fed Philadelphia manufacturing activity index fell to 15.4 points in December from 39 points in the previous month. Although any indication above zero indicates an improvement in conditions, a significant drop in the index indicates a “braking” of manufacturing activity in the area.
In addition, at the high of eight months the start-ups of new homes in the USA were formed in November, amid a sharp shortage of real estate on the market, despite higher raw material prices and labor shortages still hampering the market.
End, Manufacturing growth in the US slowed to a one-year low in December, according to an IHS Markit survey, however, with data showing that labor supply shortages and supply chain problems are beginning to ease.
According to IHS Markit, the manufacturing PMI fell to 57.8 in mid-December from 58.3 in November. This is the lowest “flight” of the index since December 2020. Any value above 50 indicates an expansion.
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I am Sophia william, author of World Stock Market. I have a degree in journalism from the University of Missouri and I have worked as a reporter for several news websites. I have a passion for writing and informing people about the latest news and events happening in the world. I strive to be accurate and unbiased in my reporting, and I hope to provide readers with valuable information that they can use to make informed decisions.
