Wall Street is declining. Powell defends the Fed's strategy, investors wait

Luc Williams

The main US stock indexes are declining

The Dow Jones Industrial dropped 1.35% at the close. and amounted to 38,596.98 points. The S&P 500 lost 1.23% at the end of the day. and amounted to 5,147.21 points. The Nasdaq Composite fell 1.40%. and closed the session at 16,049.08 points. The Russell 2000 index of small-cap companies is down 0.91%. and amounts to 2,057.23 points. The VIX volatility index increases by 14.31%, to 16.38 points.

Market reaction to the Federal Reserve chairman's comments regarding interest rates

Investors are assessing comments from Federal Reserve Chairman Jerome Powell, who indicated it would take time for Fed bankers to assess inflation before the bank cuts interest rates.

Analysts believe that Powell's suggestions that the latest US inflation data have not significantly changed the overall assessment of the situation now provide support for risky assets.

“What Powell says is important, because even if the data on inflation and the labor market have recently surprised upwards, the prospect for interest rate cuts is still valid,” wrote Kathleen Brooks, research director at XTB, in the report.

CME FedWatch indicates that the market is currently pricing in 58%. chances of a Fed rate cut in June.

Discussion of the Fed's monetary policy and its impact on bond yields

Minneapolis Fed President Neel Kashkari commented Thursday afternoon that he was wondering whether the central bank should cut interest rates at all if inflation remains sticky, joining a recent chorus of Fed members speaking conservatively about monetary policy.

After Kashkari's comments, the yield on 10-year treasury bonds rebounded from the session lows and is now hovering around 4.33%. The benchmark Treasury yield briefly hit 4.429% on Wednesday, a new record high this year.

Stock market analysis and interest rate forecasts

“Investors are taking a wait-and-see attitude at the moment,” said Sam Stovall, chief investment strategist at CFRA Research.

“The 10-year bond yield is a key driver due to concerns that the Fed is suggesting it is in no rush to cut rates, thus confirming the belief that the Fed will be slower to cut rates,” he added.

Stovall pointed out that the market remains expensive, given that the S&P 500 is trading at a 33% premium to its long-term average.

“I find this a little concerning. It's only a matter of time before we finally digest some of these gains,” he said.

Changes in company share prices based on their financial results and recommendations

Levi Strauss increased by 12.5%. after the apparel maker raised its annual profit forecast, citing savings from recent cost cuts and reduced discounts.

Chipmaker Micron Technology lost 3%, after rising about 4.5%. in the previous session, which closed at a record level.

Wayfair gained 0.5%. after Evercore ISI upgraded its rating on the company's stock to “overweight” from “equal”.

Block fell over 6%. after Morgan Stanley downgraded the payments fintech company's stock to “underweight” from “equivalent.”

Investor expectations regarding labor market data and new applications for unemployment benefits in the US

Investors are waiting for the publication of US labor market data for March. The reading will take place on Friday at 2:30 p.m. Polish time.

On Thursday, the Department of Labor reported that the number of people applying for unemployment benefits for the first time last week in the US was 221,000. Economists expected the number of new unemployed to be 213,000. against 212 thousand previously, after correction from 210 thousand

The number of unemployed people continuing to receive benefits amounted to 1.791 million in the week that ended on March 23. Analysts expected 1.8 million compared to the previously quoted 1.81 million, after correction from 1.819 million.

Information on the US trade deficit and oil prices on world markets

The US trade deficit in February amounted to USD 68.9 billion, compared to USD 67.6 billion a month earlier, after correction from USD 67.4 billion. Analysts expected a deficit of USD 66.9 billion.

On the oil market, WTI contracts for May are up by 1.30%. to USD 86.58 per barrel, which is the highest level since October last year, and May Brent futures are increasing by 1.56%. up to USD 90.74/b.


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