After a decline of one and a half percent for the broad market on Tuesday, the leading stock indices will open slightly higher on Wednesday:
- The Dow Jones Industrial Average, which consists of 30 carefully selected stocks believed to be important, rose 0.2 percent.
- The Standard & Poor’s 500 index, which includes 500 of the largest listed companies, rose 0.4 percent
- The Nasdaq Composite Index, which is dominated by technology companies, rose 0.5 percent
The interest rate on ten-year US government bonds, often referred to as the most important interest rate in the world and a risk-free alternative for investors, falls to 4.5 percent. The 10-year interest rate has continued to rise significantly in recent weeks, based on signals from the US central bank that interest rates will remain high for an extended period.
Stock markets are expensive, says Dan Villalon of AQR Capital Management To Reuters.
The Federal Reserve raised the key interest rate from zero to an interest range of 5.25 to 5.5 percent in just a year and a half. Last week, interest rates remained steady, but the Fed kept the door open for further rate hikes at the next crossroads. The interest rates committee now expects just two cuts of 0.25 percentage points next year, compared to the previous estimate of four cuts.
Derek Halfpenny, senior analyst at MUFG Bank, is among those concerned about the consequences of rising interest rates over time.
– If interest rates continue to rise, at a relatively early stage we will see an even greater decline in the stock market and a negative impact on the most important driving force of the US economy – the consumer. The decline in stock markets will further impact expectations and will begin to impact consumers’ willingness to spend, Halpenny tells Bloomberg, citing TDN Direkt.(conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using links that lead directly to our pages. No copying or other use of all or part of the Content may be permitted except with written permission or as permitted by law. For more terms see here.
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