Source: wind
U.S. stocks opened on Thursday, and the three major U.S. stock indexes rose across the board, as the minutes of the Federal Reserve’s meeting eased some investors’ concerns about taking aggressive measures to curb inflation.
The S&P 500 rose 1.5% and the Dow Jones Industrial Average rose 1.4%. The Nasdaq Composite rose 1.8%. Stocks have been rocked this week as investors weigh in on a new round of monetary tightening by the Federal Reserve to fight inflation and how much they could weigh on growth and markets.
Citigroup believes it may be time to start buying stocks again. Its strategist, Robert Buckland, noted that according to the bank’s “bear market list,” market conditions have begun to improve. The list includes a range of potential indicators for a market downturn, including valuations, credit spreads, M&A activity and capital flows.
The minutes of the Fed’s meeting released on Wednesday showed policymakers unanimously agreed to raise interest rates by 0.5 percentage points in June and July, in line with previous communications. To some extent, markets are reassured that the Fed will not tighten monetary policy more aggressively than expected, said Luc Filip, head of investment at SYZ Private Banking.
The yield on the benchmark 10-year Treasury note was unchanged from Wednesday at 2.746%. For the second time, U.S. first-quarter gross domestic product was worse than the first, contracting at an annualized rate of 1.5%.
“Recent economic data has been weaker than expected, and we do see a contraction in the economy. The market is now considering the severity of the slowdown,” said Shaniel Ramjee, multi-asset fund manager at Pictet Asset Management.
“We are focused on profitability and profitability. Many companies with stable earnings are reporting lower expectations,” Ramjee said. “Even the tech industry is not immune to pressure on margins, especially input costs such as wages.”
Initial jobless claims came in at 210,000, down from the previous week and below economists’ expectations, presenting a mixed picture of the economy.
On the individual stock front, Nvidia shares fell 3% after its sales forecast for the quarter fell short of Wall Street expectations despite reporting record revenue. Shares of retailer Williams-Sonoma rose 9 percent after the company reported a profit that beat analysts’ expectations. Shares of Macy’s surged 13% after it raised its full-year earnings forecast. Broadcom rose 0.3 percent after Broadcom confirmed it would buy VMware for $61 billion in cash and stock. Broadcom fell 0.5%.
This week, however, the market appears to have regained its footing to some extent as investors hope that inflation is starting to peak, with the Dow and S&P 500 up 4% and 3%, respectively, for the week. The Nasdaq also rose 2%.
22V Research’s Dennis DeBusschere said in a report on Thursday that U.S. equities are currently on a more stable footing, with yields broadly lower and inflation expectations continuing to decline. However, investors believe the tightening in financial conditions over the past six-plus months has been enough to slow economic growth significantly. This is consistent with a decline in the breadth of U.S. economic data.
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