Last Updated 4:03 PM EST
Stock indices finished today’s trading session in the green after Powell’s speech. The Dow Jones Industrial Average (DJIA), the S&P 500 (SPX), and the Nasdaq 100 (NDX) gained 0.02%, 1.05%, and 2.16%, respectively.
The energy sector (XLE) was the session’s laggard, as it lost 1.93%. Conversely, the technology sector (XLK) was the session’s leader, with a gain of 2.34%. In addition, WTI crude oil fell as it hovers around the mid-$76 per barrel range.
Furthermore, the U.S. 10-Year Treasury yield fell to 3.4%, a decrease of more than 11 basis points. Similarly, the Two-Year Treasury yield also decreased, as it hovers around 4.1%.
The Atlanta Federal Reserve updated its latest GDPNow reading, which allows it to estimate GDP growth in real time. The “nowcast” becomes more accurate as more economic data is released throughout the quarter. Currently, it estimates that the economy will expand by about 0.7% in the first quarter.
This is unchanged from its previous estimate of 0.7%, which can be attributed to recent releases from the U.S. Census Bureau and the Manufacturing ISM Report from the Institute for Supply Management
Nevertheless, inflation continues to be a problem around the world. Therefore, it’ll be interesting to see what the actual GDP growth will be and how it’ll change going forward as higher rates start to impact the economy.
Last updated 3:10 PM EST
Stocks surged after the Federal Reserve hiked its benchmark interest rate to 4.75%. This move was widely expected as the central bank has previously hinted at slowing down the pace of its interest hikes.
However, although some investors may see this as a bullish sign after becoming accustomed to larger rate hikes, it’s important to remember that the Federal Reserve is still continuing to tighten financial conditions. This means that the economy will slow down.
Indeed, it is widely believed that monetary policy has a six to 12-month lag before impacting the overall economy. That means that the increasing number of layoffs is the result of where interest rates were during mid-2022. In addition, it’s worth noting that the Federal Reserve plans on maintaining higher rates for a while once they reach their peak.
Last updated: 12:00PM EST
Stocks are in the red halfway into today’s trading session as investors awaited the big decision from the Fed regarding a hike in interest rates. As of 12:00 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are down 0.9%, 0.5%, and 0.3%, respectively.
Earlier today, the Institute for Supply Management released its monthly report for the ISM Manufacturing Purchasing Managers’ Index, which measures the month-over-month change in production levels. A number over 50 represents an expansion, whereas anything below 50 means a contraction. The report came in at 47.4, which was lower than the expected 48.
It’s worth noting that this indicator is lower than last month’s reading of 48.4 and has been slowly downtrending ever since its peak in April 2021, when it hit a high of 64.7.
In addition, the Bureau of Labor Statistics released its JOLTS Job Openings report, which helps measure job vacancies in the U.S. The number came in at 11.012 million job openings for December, above the expected 10.25 million.
Although lower than the peak of 11.855 million, job openings are still near their highs. Nonetheless, job openings are on an overall decline, and it will be interesting to see if this trend continues as rates continue to rise while growth slows down.
In addition, it’s important to remember that this data is for December, thus, making it a lagging indicator. Since then, many companies have announced that they will reduce their workforce in order to cut costs.
Last updated: 9:48AM EST
Stocks opened in the red on Wednesday as investors awaited the big decision from the Fed regarding a hike in interest rates.
The Dow Jones Industrial Average (DJIA) and the S&P 500 (SPX) inched down 0.6% and 0.33%, respectively while the Nasdaq 100 (NDX) declined by 0.28% as of 9:48 a.m. EST, Wednesday.
In other news, the ADP non-farm employment data came in on Wednesday and indicated that job growth continued to moderate in January. The data indicated that 106,000 jobs were added in January versus a consensus of 158,000 and lower than the addition of 235,000 jobs in December.
The earnings season rolled on with another round of earnings announced before the markets opened. While tobacco giant Altria (NYSE: MO) delivered mixed Q4 results, telecom giant T-Mobile (NASDAQ: TMUS) reported Q4 revenues that fell short of estimates.
Meanwhile, fitness platform Peloton Interactive (NASDAQ:PTON) delivered better-than-expected results as its losses narrowed in the quarter.
First published: 5:50AM EST
Futures on the Dow Jones Industrial Average (DJIA) and the S&P 500 (SPX) inched down 0.45%, while those on the Nasdaq 100 (NDX) were down 0.39% as of 5.50 a.m. EST, Wednesday.
After ending January on a solid footing, stock futures are down on February 1, as investors await the Federal Reserve’s decision on the interest rate hike expected in the afternoon today. In January alone, the SPX gained 6.60%, the DJIA 2.87%, and the NDX gained 11.53%.
Traders will also be watching for earnings from major American tech companies. Meta Platforms (NASDAQ:META) reports today after the market closes. Also, Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL), and Apple (NASDAQ:AAPL) report tomorrow. Investors will be glued to management comments from these companies to gauge what the future holds for the stock market.
At the time of writing, European markets traded slightly higher on the positive news from the European inflation reading. Notably, the eurozone headline inflation number for January came in at 8.5%, marking a third straight month of reduction backed by a fall in energy prices.
Markets Eagerly Await Powell’s Speech
The main focus for today would be the FOMC’s interest rate announcement and Fed Chair Powell’s speech thereafter for any indication of future interest rate movements. Markets may have factored in a 25 basis points increase in the rates but will closely watch for any hawkish comments from Powell later on. His speech will likely drive the market sentiment and direction for a couple of days going ahead.
Asia-Pacific Markets Witness a Mixed Day
A majority of Asia-Pacific markets ended the day in the green in tandem with their U.S. counterparts. Hong Kong’s Hang Seng index gained 1.05%, while Mainland China’s Shanghai Composite and Shenzhen Component were up 0.90% and 1.38%, respectively.
Japan’s Nikkei 225 gained 0.07%, while the Topix ended the day down 0.15%.
India’s Nifty 50 Index ended the day down 0.26% after witnessing a volatile trading day. On one hand, investors applauded the new budget, on the other, traders were fraught at the news that Credit Suisse (NYSE:CS) stopped accepting bonds of Adani Group as collateral owing to the short selling report by Hindenburg.
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