Tech stocks rose Wednesday after Federal Reserve announcement recent interest rate hikes After Fed Chairman Jerome Powell suggested the economy was showing signs of ‘disinflation’.
When the closing bell rang on Wall Street, the tech-focused Nasdaq Composite (^IXIC) rose 2%, with market charges rising following Chairman Powell’s comments.
S&P 500 (^GSPC) rose 1% and the Dow Jones Industrial Average (^ DJI) up 0.03%, or just 8 points. The Dow continued to put pressure on energy stocks as the price of WTI crude fell 3% to about $76.50 a barrel.
Wednesday afternoon is Federal Reserve Announces Latest Rate HikeThis is the move that raised the Fed’s benchmark policy rate to its highest level since October 2007. Fed moves showed the smallest gain in almost a year.
In a statement, the Fed said inflationary pressures were easing, but that inflation “remained elevated” as evidenced of persistent price pressures across the economy. But Powell said at a news conference that the Fed “for the first time” could say “the disinflationary process has begun.”
Investors took Powell’s comments as an indication that the Fed may be nearing a pause in its current rate hike campaign. Investors see the pause in rate hikes as a positive sign for riskier assets such as tech stocks. Yahoo Finance’s Julie Hyman detailed earlier this week.
Wednesday’s rally is the Peloton (PTON) cut its cash burn to $94 million in the most recent quarter, down from $747 million nine months ago, as its stock surged 26% on Wednesday morning’s news. On an adjusted basis, the company reported free cash flow of $8 million during the holiday quarter.
“If you’re wondering if Peloton will make a dramatic comeback, this quarter’s results show that the changes we’re making are working,” said CEO Barry McCarthy. increase. wrote in a letter to shareholders.
Pandemic darling Peloton was joined by Kathy Wood’s flagship ARK Innovation ETF (arc) rose 4% on Wednesday, enjoying a Fed-induced rally.
The S&P 500 posted its best January since 2019 and the Nasdaq 100 enjoyed its strongest January gain since 2001, posting more than 10 gains. %.
But as earnings season is in full swing, the news on Wednesday wasn’t all good. Another disappointing quarter from Snap (snap) got the most investor attention on Tuesday night.
The social media company’s share price fell 10% after its acquisition. told investors The company’s internal forecasts assume that revenue for the current quarter will be down 10% to 2% year over year.
match group (MTCHMore) and Electronic Arts (EAs) shares also fell 5% and 9% respectively on Wednesday. After reporting a disappointing quarter Tuesday afternoon.
In terms of economic data, New Data on Private Employment Growth Private employers added 106,000 jobs last month, according to an ADP survey, which is less than the 170,000 economists expected.
In its report, the ADP said weather had affected its labor market measurements, citing flooding in California and snowstorms in the central and eastern parts of the country during the reference week. increase.
“In January we saw the impact of weather-related disruptions on employment in the reference week,” said ADP chief economist Nella Richardson. The other weeks of the month were also strong.”
the data above Recruitment information for December Wednesday’s announcement suggested that demand for workers remained strong, with 11 million jobs available at the end of the month, up from 10.4 million at the end of November.
Elsewhere in the economic data, S&P Global and Institute for Supply Management measurements on the manufacturing sector point to continued weak activity in the first month of 2023.
ISM Latest Manufacturing PMI Readings fell to lowest level since May 2020Economists see it as another sign that recessionary pressures continue to build on the US economy.
In a note to clients Wednesday, Andrew Hunter, senior U.S. economist at Capital Economics, took a closer look at the ISM report and found that “weakness in the domestic economy is increasingly the main driver of the manufacturing sector’s woes. Overall, the ISM report supports our view that the U.S. economy is approaching recession.”
S&P Global’s reading showed Chris Williamson, chief business economist at S&P Global Market Intelligence, said the deterioration in the manufacturing sector was slightly slower in January than in December, but still “concerned about the health of the commodity production sector. It shows that it is declining as rapidly as possible.
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