July 20, 2024

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US stocks rebounded again as investors weigh Powell’s hawkish comments and Ukraine war

US stocks rebounded again as investors weigh Powell’s hawkish comments and Ukraine war

US stocks rose on Tuesday, erasing the volatility that followed comments made the day before by Federal Reserve Chairman Jerome Powell, in which he indicated that the central bank could introduce larger interest rate increases at upcoming policy meetings in an attempt to rein in inflation that has It is currently at its highest level in 40 years. .

what happens
  • Dow Jones Industrial Average DJIA,
    + 0.74%
    The index rose 234 points, or 0.7%, to 34,787 points.

  • S&P 500 SPX Index,
    + 1.08%
    It was up 44 points or 1% at 4,505 points.

  • Nasdaq Composite,
    + 1.84%
    It rose 234 points, or 1.7%, at 14,074 points.

Stocks stumbled Monday after Powell said the central bank could raise 50 basis points, or half a percentage point, in future meetings, but ended the day well off session lows. The Dow Jones fell 0.6%, cutting a five-day winning streak, while the S&P 500 ended partially lower and the Nasdaq Composite fell 0.4%.

What is driving the markets

Treasury yields rose after that Powell’s statement on Monday And they were extending the rise Tuesday. 10-year treasury bond yield BX: TMUBMUSD10YIt was at 2.366%, up about 4 basis points after rising to the highest level since May 2019 on Monday.

Louis Federal Reserve Chairman James Bullard, in an interview with Bloomberg TV, said Tuesday morning that 50 basis points should move. Definitely “in the mix” As the Federal Reserve moves interest rates higher. At last week’s Federal Reserve meeting, Bullard vetoed in favor of a 50 basis point hike instead of the 25 basis point move that policy makers had agreed to.

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There are more comments coming from Federal Reserve officials on Tuesday, including New York Fed President John Williams.

Mark Heffel, chief investment officer at UBS Global Wealth Management, said in a note that Powell’s comments showed the Fed is now in inflation-tight position, which is bad news for bonds but more accurate for equities.

“We continue to see a path for markets ending the year higher. Although there is widespread criticism, it is too early to take a view that the Fed will not be able to negotiate the exact line of lowering inflation without derailing growth.

Amid the high degree of uncertainty, Heffel said, UBS favors select overweight and underweight deals, which results in an overall neutral allocation of shares. Investors should prepare for higher interest rates, given exposure to major US loans and equity sectors that typically outperform in the current environment, including valuable stocks and financial statements.

at the same time, Russia has intensified its air and sea attacks across UkrainePresident Joe Biden encouraged American companies to strengthen their cyber defenses against Russia.

“Fed policy is about to become restrictive and the tightening of the commodity market will remain even if there is a quick solution to the crisis in Ukraine,” said Edward Moya, senior market analyst for the Americas at Oanda.

“The impact of this war is anyone’s guess, but what we do know is that the longer it goes on, the greater the risk of stagflation on the global economy,” he added.

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Companies in focus
Other assets
  • ICE DXY US Dollar Index,
    -0.00%And the
    The currency gauge against a basket of six major competitors fell 0.1%.

  • Oil futures rose, with the US benchmark CL.1,
    It fell 1.3% to about $108.50 a barrel, while the GC00 gold futures contract fell,
    It fell 0.5 percent to trade near $ 1,920 an ounce.

  • Bitcoin BTCUSD,
    It rose 3.9% to trade near $42,700.

  • The Stoxx Europe 600 SXXP,
    + 0.85%
    It rose 0.8% and the FTSE 100 UKX index in London,
    + 0.46%
    Advance 0.4%.

  • Shanghai SHCOMP Compound,
    + 0.19%
    It rose 0.2%, while the Hang Seng HSI index rose,
    + 3.15%
    Hong Kong jumped 3.1% and Japan’s Nikkei 225 index,
    + 1.48%
    1.5% profit.