September 28, 2022

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Wall Street rallied after Fed report - warns of monetary tightening

Wall Street rallied after Fed report – warns of monetary tightening

The central bank hereby indicates that there will be more rapid rate increases in the future.

Investors on Wall Street have reacted positively, especially the so-called meme shares on Nasdaq that received a boost.

Kim Kardashian's deal with Beyond Meat sent the stock price up sharply.

Kim Kardashian’s deal with Beyond Meat sent the stock price up sharply. (Photo: Demetrius Kambouris/Getty Images/Vogue/AFP/NTB)

Influencer Kim Kardashian also helped lift the mood on stock exchanges on Wednesday.

  • The Nasdaq Technology Exchange rose 1.51 percent.
  • And the Dow Jones Industrial Average closed by 0.60 percent.
  • The broad S&P 500 index rose 0.95 percent.

The minutes of the interest rate meeting were released three weeks ago, when the Federal Reserve raised interest rates by 0.50 percent, on Friday at 20:00 Norwegian time.

Technology companies have risen steadily. Tesla (up 4.9 percent) and Twitter (up 3.8 percent) were among the top gainers.

  • The minutes indicate that the central bank is prepared to continue several interest rate increases of 50 basis points at a time.
  • In addition, the interest rate committee said that monetary policy may have to move beyond “neutral” to “restrictive” terrain, in order to slow economic activity.
  • The minutes give the impression that the interest rate committee believes that it can reduce inflation, at the same time that it can take into account the need for financial stability.

Before the Fed minutes, there was the first mixed sentiment in the stock market.

TDN Direkt writes that Bloomberg notes that investors are concerned, among other things, that growth could slow significantly under tighter monetary policy. The war in Ukraine and Chinese shutdowns are exacerbating expectations.

Our main scenario is still that a recession can be avoided and that geopolitical risks will decrease during the year, and that stocks will rise. The recent market slump underscores the importance of being selective and considering strategies that reduce volatility, says investment manager Mark Heffel at UBS Global Wealth Management, according to the news service.

Many market participants are concerned that the US Federal Reserve has not caught up with the ever-increasing inflation. The market is now pricing in an average rate increase of 1.34 percentage points over the next three rate meetings. This is down from 1.41 since Monday’s closing price, writes TDN Direkt.

Central Bank Governor Jerome Powell has indicated that there could be a 50 basis point hike in interest rates, or 0.5 percentage point, at the next two interest rate meetings. The question is whether that will be enough to rein in inflation.

new part

Our challenge is that we have reached a new chapter in the history of inflation. As you may remember, the question last fall was whether they were temporary. And it turned out that it was not. Then came the Fed story towards the end of the year and early this year about whether to tighten too much. And they did, and now everything is priced, James Liu, founder and CEO of Clearnomics tells Yahoo Finance Live. It continues:

The market is now looking at the fundamentals of how inflation affects business profitability and consumer demand.

Retail and convenience store chains rose sharply. Exclusive store chain Nordstroms was among the stocks that rose sharply on Wednesday. The stock closed up 13.8 percent after the company revised its sales and earnings guidance for the year.

Besides regular drivers, food producer Beyond Meat is up more than 13 percent after announcing a collaboration agreement with influencer Kim Kardashian. Among other things, it will promote the company’s products on social media, where it has hundreds of millions of followers around the world. Beyond Meat produces plant-based meat products, that is, meat without meat.(Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using a link that leads directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.

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