NEW YORK (AP) — The Federal Reserve chairman says the interest rate cuts Wall Street so desperately wants are still likely, even if they are delayed because of continued high inflation. U.S. stock markets ended mixed after the company said it was high. The S&P 500 fell 0.3% Wednesday after a big afternoon gain disappeared. The Dow Jones Industrial Average rose 0.2%, while the Nasdaq Composite fell 0.3%. Regarding the downturn in financial markets, the chairman said it was taking longer than expected for inflation to be brought under control. But he also said his next move was unlikely to be a rate hike and announced steps to stabilize the bond market.
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NEW YORK (AP) — The Federal Reserve chief says the interest rate cuts Wall Street is crying out for remain likely, even if they are postponed because of continued high inflation. U.S. stocks rose on Wednesday after the announcement.
The S&P 500 rose 0.3% in late trading after the Federal Reserve left major stock indexes unchanged. interest rate As expected by the market, this was the highest level since 2001. As of 3:38 p.m. ET, the Dow Jones Industrial Average was up 276 points, or 0.7%, and the Nasdaq Composite was up 0.6%.
Federal Reserve Chairman Jerome Powell has voiced the fears that have sent stock prices down in recent days and canceled traders’ hopes that a rate cut is imminent. “This shows that we are not making further progress towards our goals.” He also said it would likely “take longer than previously expected” to gain enough confidence to cut interest rates to ease pressure on the economy and investment prices.
But it also eased concerns swirling in the market that inflation was so high that further rate hikes might be necessary.
“I think it is unlikely that the next policy rate decision will be a rate hike,” Powell said. The stock price rose immediately after that.
The Fed also provided some support to financial markets, saying it would slow the pace of decline in its Treasury holdings. Such a move could lubricate trading in the financial system and bring stability to bond markets. Powell said the Fed did so to reduce “the risk that money markets show signs of stress.”
The move and Powell’s comments sent yields lower in the bond market.
The yield on the 10-year US Treasury note fell to 4.62% from 4.65% just before the announcement, reducing pressure on the stock market. The two-year Treasury yield, which more accurately reflects expectations for the Fed, fell to 4.95% from 5.04% late Tuesday.
Traders themselves had already earlier this year reduced their expectations for one or two rate cuts this year. 6 or more. That’s because they were looking at the same series of reports as the Fed showing that inflation is still here. stubbornly high than expected this year.
Wall Street is awaiting further announcements on interest rates today. Reported by Associated Press reporter Seth Stell.
Mr. Powell has already recently suggested Interest rates could remain high for some time as Fed officials wait for further confirmation that inflation is falling toward their 2% target. This was a disappointment for Wall Street, as the Fed had previously indicated this was the case. Draw a pencil in three cuts Change the interest rate to 2024.
Powell’s comments on Wednesday were generally seen as less harsh than feared.
“Before markets get too excited, it’s important to note that the Fed, like all of us, is responding to economic data as it unfolds,” said Seema Shah, chief global strategist at Principal Asset Management. It’s worth remembering.” “Data from the coming months will be critical to the Fed’s path.”
Without the benefit of interest rate easing, companies will need to generate better profits to support stock prices.
Amazon has since risen 4.5%. reported better profits The latest quarter beat analysts’ expectations. The retail giant believes the reacceleration of growth in its cloud computing business is also benefiting from AI demand.
Chemical maker DuPont was another winner, posting better-than-expected profits and rising 8.1%. It said demand from customers in the semiconductor industry continues to recover.
That helped offset a 16.5% decline in CVS Health, which reported weaker-than-analysts’ expectations for its latest quarter.It is said that the damage was caused Increased costs in Medicare Advantage Business has fallen into a slump, and full-year profit forecasts have been revised downward.
Starbucks The company fell 16.3% in its most recent quarter as both profit and sales fell short of expectations. Sales were particularly weak at stores outside the United States, leading to downward revisions to full-year profit and sales forecasts.
The super micro computer, one of Wall Street’s hottest stars, returned 13.1% despite beating expectations. The company, which sells servers and storage systems used for AI and other computing, posted revenue that fell short of analysts’ expectations. Expectations were high as the company’s stock had already tripled this year amid widespread Wall Street enthusiasm over the artificial intelligence technology.
Advanced Micro Devices fell 7.9% despite reporting earnings in line with expectations. Revenue was slightly below expectations, as was the midpoint of the expected revenue range for the quarter.
Before the Fed’s announcement, stock prices and Treasury yields had been moving relatively little on the back of a weaker-than-expected economic report.
U.S. manufacturing unexpectedly contracted again last month, according to a report from the Institute for Supply Management.
Another report found that U.S. employers The number of advertised jobs has decreased slightly. At the end of March, it exceeded economists’ expectations. Wall Street’s hope was that a cooldown there could help prevent upward pressure on inflation. The downside is that if the economy weakens too much, significant support to the economy could be lost.
Some recent economic reports have raised concerns about the possibility of economic stagnation coupled with high inflation. The Fed doesn’t have great tools to fix this scenario, called “stagflation.”
But Powell downplayed that risk, saying inflation is much lower and economic growth is much better than in the 1970s and 1980s, the last time there was stagflation.
“I don’t see any ‘stag’ or ‘inflation,'” he said.
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Associated Press writers Matt Ott and Zimon Zhong contributed.
