Last updated at 4:03 p.m. EST
Stock indexes ended 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) rose by 0.02%, 1.05% and 2.16%, respectively.
The energy sector (XL) was the session laggard, down 1.93%. Conversely, the technology sector (XLK) was the session leader, up 2.34%. Additionally, WTI Crude fell as it hovered around the mid-$76 per barrel range.
Additionally, the 10-year US Treasury yield fell to 3.4%, down more than 11 basis points. Similarly, the 2-year government bond yield also declined as it hovered around 4.1%.
The Atlanta Federal Reserve has updated its latest GDPNow metric, which allows it to estimate real-time GDP growth. The “Nowcast” will become more accurate as more economic data is released throughout the quarter. He currently estimates that the economy will expand by around 0.7% in the first quarter.
This is unchanged from the previous estimate of 0.7%, reflecting recent releases from the US Census Bureau and the Institute for Supply Management’s Manufacturing ISM report
Nonetheless, inflation remains a problem around the world. Therefore, it will be interesting to see what actual GDP growth will look like and how it will change in the future as higher interest rates start to impact the economy.
Last updated at 3:10pm EST
Stocks rose sharply after the US Federal Reserve raised interest rates to 4.75%. The move was widely expected as the central bank had previously indicated it was slowing the pace of its rate hikes.
While some investors may see this as a bullish sign after they adjust to larger rate hikes, it’s important to remember that the Federal Reserve continues to tighten financial conditions. That means the economy will slow down.
In fact, it is widely believed that monetary policy lags behind by six to 12 months before affecting the broader economy. This means that the rising number of layoffs is the result of interest rates in mid-2022. Additionally, it’s worth noting that the Federal Reserve plans to keep interest rates higher for a while once they peak.
Last updated: 12:00 p.m. EST
Stocks are down midway through today’s trading session as investors await the Fed’s big decision on a rate hike. As of 12:00 p.m. EST, the Dow Jones Industrial Average, S&P 500, and Nasdaq 100 are down 0.9%, 0.5%, and 0.3%, respectively.
The Institute for Supply Management today released its monthly report for the ISM Manufacturing Purchasing Managers’ Index, which measures the monthly change in production levels. A number above 50 represents expansion, while anything below 50 represents contraction. The report came in at 47.4, which was below the expected 48.
It is worth noting that this indicator is below last month’s reading of 48.4 and has been slowly trending down since its peak in April 2021 when it peaked at 64.7.
In addition, the Bureau of Labor Statistics released its JOLTS Job Openings Report, which helps measure job openings in the United States. The figure totaled 11.012 million vacancies in December, more than the 10.25 million expected.
Despite being below the peak of 11.855 million, job vacancies are still close to their highs. Still, job vacancies are overall down and it will be interesting to see if this trend continues as interest rates continue to rise while growth slows.
Additionally, it is important to remember that this data is for December, making it a lagging indicator. Since then, many companies have announced they are cutting staff to cut costs.
Last updated: 9:48 am EST
Shares opened lower on Wednesday as investors awaited the Fed’s big decision on a rate hike.
The Dow Jones Industrial Average (DJIA) and the S&P 500 (SPX) declined 0.6% and 0.33%, respectively, while the Nasdaq 100 (NDX) was down 0.28% at 9:48 a.m. EST on Wednesday.
In other news, ADP nonfarm payrolls data came out on Wednesday, suggesting that job growth weakened further in January. The data showed January job creation was 106,000 versus a consensus of 158,000 and below December’s 235,000 job creation.
The earnings season continued with another round of earnings announced before the markets opened. While tobacco giant Altria (NYSE: MON) delivered mixed Q4 results, telecoms giant T-Mobile (NASDAQ:TMUS) reported Q4 sales that fell short of estimates.
Meanwhile, the fitness platform Peloton Interactive (NASDAQ: PTON) delivered better-than-expected results as its losses narrowed during the quarter.
Initial release: 5:50 p.m. EST
Futures on the Dow Jones Industrial Average (DJIA) and the S&P 500 (SPX) declined 0.45%, while that of the Nasdaq 100 (NDX) was down 0.39% as of 5:50 a.m. EST on Wednesday.
After ending January on a solid footing, stock futures are down on February 1 as investors await the Federal Reserve’s decision on interest rate hikes expected this afternoon. In January alone, the SPX is up 6.60%, the DJIA is up 2.87% and the NDX is up 11.53%.
Traders will also be on the lookout for gains from big American tech companies. metaplatforms (NASDAQ:META) reports after market close today. Also Amazon (NASDAQ:AMZN), Letters (NASDAQ:GOOGL) and apple (NASDAQ:AAPL) report tomorrow. Investors will be eager to hear management comments from these companies as they gauge what the future holds for the stock market.
At the time of writing, European markets were trading slightly higher on the positive news out of European inflation. Notably, the euro-zone headline inflation rate for January came in at 8.5%, marking a third straight month of decline helped by a fall in energy prices.
Markets are eagerly awaiting Powell’s speech
The main focus for today would be the FOMC rate announcement followed by Fed Chair Powell’s speech to provide clues on future rate moves. Markets may have discounted a 25 basis point hike in interest rates but will be watching closely for any hawkish comments from Powell later. His speech will likely drive market sentiment and direction for a few days.
The Asia-Pacific markets are having a mixed day
A majority of Asia Pacific markets ended the day in the green, in line with their US counterparts. Hong Kong’s Hang Seng Index rose 1.05%, while Mainland China’s Shanghai Composite and Shenzhen Component rose 0.90% and 1.38%, respectively.
Japan’s Nikkei 225 rose 0.07%, while the Topix ended the day down 0.15%.
India’s Nifty 50 Index ended the day down 0.26% after a volatile trading day. On the one hand, investors applauded the new budget, on the other hand, traders were excited about the news that Credit Suisse (NYSE:CS) has stopped accepting Adani Group bonds as collateral due to Hindenburg’s short sale notification.
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