June 29, 2022

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Big rally on Wall Street after Powell's comments - Nasdaq rose 2.8 percent

Big rally on Wall Street after Powell’s comments – Nasdaq rose 2.8 percent

After a quiet start to the trading week in the US stock markets, all major indices rose from the start of Tuesday.

This is what it will look like after the end of the trade:

  • The S&P 500 rose by two percent.
  • The Nasdaq rose 2.8 percent.
  • The Dow Jones rose 1.34 percent.

At 20:00 Norwegian time, US Federal Reserve Governor Jerome Powell took the stage at the Wall Street Journal’s “Future of Everyting”, where much is about high inflation in the country and how the Fed will act to bring inflation down to its two percent target.

The reaction on Wall Street did not wait in the minutes after Powell began speaking. The rally of more than 2% for the Nasdaq quickly eased back to about 1.6% for the day after the central bank governor’s comments.

However, by the end of trading, the three major indices rebounded significantly, thus ending the day in a positive direction.

over neutral

In a video interview, Powell began by emphasizing his full readiness to bring inflation down to a normal level.

“If that means raising interest rates above a neutral level, we won’t hesitate,” Powell said.

A neutral interest rate level means an interest rate level that neither provides growth nor provides restraint on the economy.

He was aware that the central bank would have to be more aggressive in its policy if inflation did not fall.

The American economy is strong now and the labor market is very strong. The economy is in a position to handle tighter monetary policy. But he said there would be some pain involved in restoring price stability.

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Buffett buys

Investor legend Warren Buffett, the man behind industrial conglomerate Berkshire Hathaway, bought more than $50 billion in stock in the first quarter and is now continuing to buy in line with lower stock prices.

When Berskhire held its annual shareholder meeting in late April — its first in physical form since before the pandemic — it became known that the Omaha-based investment firm had increased or secured significant positions in, among other things, oil company Occidental. , and computers. Manufacturer HP and oil company Chevron.

The development is in stark contrast to the way Buffett has run Berkshire in the past two years. The investor myth has been vocal about what he thinks about the increased values ​​of many companies that have accumulated during the pandemic, and he believes it has been increasingly difficult to find assets with the potential for significant returns.

On Tuesday, it was announced that Buffett’s Berkshire company had acquired 68.9 million shares in Paramount Group, the global media company that changed its name from ViacomCBS earlier this year. The company behind Paramount Plus Energy Service.

Paramount shares rose more than 10 percent in pre-trading when Buffett’s stake, a $2.6 billion stake, became known at the end of March. CNBC.

The stock eventually rose just over three percent.

In addition to Paramount, it became clear Monday that Buffett was also heavily involved with Citigroup throughout the first quarter. according to financial times Berkshire Hathaway now owns stock in Citi worth about $3 billion, equivalent to an ownership stake of about 2.8%. The stock is up nearly eight percent.

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Walmart and Home Depot

In the United States, reporting season is approaching in the first quarters for many companies, and on May 17, two business giants provided numbers for the first three months of 2022.

Walmart disappointed the market with its numbers, reporting a net income that fell to just over $2 billion, down from 2.7 billion last year.

The US’s largest retailer felt higher fuel prices and higher stock numbers, according to CNBC. The stock eventually fell above eleven percent.

The company continued to adjust its sales estimates for the rest of the year, but lowered its net profit estimates. Walmart’s chief financial officer told CNBC that employees returned faster after corona, which has now increased the number of employees at the company.

Home Depot, which sells building materials, in turn delivered better than expected numbers and expects sales to increase by about three percent per share, he writes. CNBC.

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