July 7, 2022

Wall Street stocks rise as traders assess the future direction of federal monetary policy

Wall Street stocks rise as traders assess the future direction of federal monetary policy

Stock prices rose on Wall Street on Wednesday as traders awaited details of the Federal Reserve’s meeting in early May that may shed more light on the future direction of monetary policy.

The S&P 500, which fell into bear market territory last week during a few tough months for global stocks, rose 0.6 percent in choppy trading. The technology-heavy Nasdaq Composite Index rose 0.8 percent.

Wednesday’s moves came even though the main proxy for US industrial production ahead beat expectations and consumer-facing companies continued to issue bleak forecasts.

Long-term merchandise orders rose 0.4 percent In April from the previous month, it slowed from 0.6 percent in March and fell short of economists’ estimates compiled by Refinitiv for a 0.6 percent increase. The core reading that excludes transfer orders, which could skew data, also missed expectations, rising 0.3 percent.

The Federal Reserve, which influences monetary policy around the world and releases the minutes of its early-May rate-setting meeting later on Wednesday, has Send strong signals It will raise borrowing costs to ease inflation, which is at its highest level in four decades. However, some analysts are questioning the US central bank’s willingness to raise interest rates.

“Markets are telling us that recession risks are rising,” said Marie Nicola, multi-asset portfolio manager at Bain Bridge Investments.

But if the Fed’s calculation of its latest rate-setting meeting includes “language that points to a pause, or they are concerned about growth, then obviously that could really change how markets are priced,” Nicola said.

“I wouldn’t be surprised if we start seeing more language around looking at the data,” said Salman Paige, portfolio manager at Unigestion. “It’s not likely to be a really meaningful shift at this point, because they’re going to want some very clear indication that inflation has shifted and we haven’t arrived.” distance. ”

On the corporate front, Dicks Sporting Goods on Wednesday became the latest US consumer company to cut its earnings forecast, sending its shares down nearly 7 percent. follow this bruising session Stock markets crossed Tuesday after social media group Snap warned of macroeconomic conditions, and investors freaked out over disappointing US housing data and business surveys.

In fixed income markets, the yield on 10-year Treasuries, which supports borrowing costs around the world and falls as the price of a debt instrument rises, was trading steady at 2.76 percent — near a one-month low.

The two-year Treasury yield, which measures interest rate expectations, fell 0.02 percentage points to 2.5 percent, after rising above 2.8 percent in early May.

Reflecting the continuing uncertainty about the direction of markets and monetary policy, the dollar index, which measures the US currency against another six, rose 0.3 percent.

The euro lost 0.5 percent against the dollar to just over $1.06, with the rebound fueled by European Central Bank President Christine Lagarde. Signaling The end of negative interest rates in the eurozone has faded.

Elsewhere in stock markets, the European Stoxx 600 regional index added 0.8 percent.