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Wall Street rally while Fed reports meet expectations

  • Bold minutes: future rate hikes of 50 bp “likely”
  • Nordstrom climbs after raising the profit outlook
  • Nvidia Q2 revenue forecast falls below expectations
  • Indexes up: Dow 0.60%, S&P 0.95%, Nasdaq 1.51%

NEW YORK, May 25 (Reuters) – Wall Street closed higher on Wednesday, reinforced after minutes from the Federal Reserve’s last monetary policy meeting showed that politicians unanimously felt that the US economy was very strong as they struggled to curb inflation without triggering a recession .

The minutes of the Federal Open Market Committee’s May meeting, which culminated in a 50 basis point increase in the Fed Funds target rate – the biggest jump in 22 years – showed that most committee members considered that further such rate hikes “would probably” be appropriate ” at the upcoming meetings in June and July.Read more

“Uniformity in opinions is a good thing,” said Ross Mayfield, an investment strategy analyst at Baird in Louisville, Kentucky. “There is a lack of uncertainty about what needs to be done in the short term.”

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“When (the Fed) comes to September, they will have plenty of financial data to move from there, so they will continue to maintain options,” Mayfield added.

All three major US stock indices were buzzing earlier in the day due to growing unrest stemming from business and consumer surveys, economic data and company results suggesting a cooling US economy – even as the Fed prepares to throw a bucket of cold water on it. to cope with decades. – high inflation.

Fears that overly aggressive interest rate hikes by the Fed could tip the economy into recession despite evidence that inflation peaked in March have fueled these concerns.

“There is a certain belief in the idea that inflation does (the Fed’s) job for them,” Mayfield said. “It is already cooling off, and financial conditions have tightened over the past month due to dollar strength and weakness in the stock market.”

On Thursday, the Ministry of Trade will release its second version of GDP in the first quarter, which analysts expect to slow down a slightly shallower contraction than the 1.4% quarterly annual fall that was originally reported.

The Personal Consumption Expenditures (PCE) report will follow on Friday, which will provide further clues on consumption spending and whether inflation peaked in March, as other indicators have suggested.

A person walks past the New York Stock Exchange (NYSE) in Manhattan, New York City, USA, May 19, 2022. REUTERS / Andrew Kelly

The Dow Jones Industrial Average (.DJI) rose 191.66 points, or 0.6%, to 32,120.28, the S&P 500 (.SPX) rose 37.25 points, or 0.95%, to 3,978.73 and Nasdaq Composite added 9 points (.70IC. 1.51% to 11,434.74).

Nine of the 11 major sectors in the S&P 500 rose, with consumer stocks (.SPLRCD) leading the herd with a gain of 2.8%. Inc (AMZN.O) and Tesla Inc (TSLA.O) gave the strongest boost to the S&P 500 and Nasdaq, with increases of 2.6% and 4.9% respectively.

The department store operator Nordstrom Inc (JWN.N) rose by 14.0% on the heels of its positive annual profit and revenue forecasts. read more

Fast food chain Wendy’s Co (WEN.O) jumped 9.8% after a regulatory filing revealed that shareholder Nelson Peltz was considering a potential takeover bid for the company. read more

The shares of Nvidia Corp (NVDA.O) fell more than 8% in after-sales after the company’s revenue forecast for the second quarter fell short of expectations. read more

Advanced issues were more than falling on the NYSE with a ratio of 3.56 to 1; on the Nasdaq favored a ratio of 2.22 to 1 advance.

The S&P 500 posted three new 52-week highs and 32 new lows; The Nasdaq Composite recorded 23 new highs and 255 new lows.

Volume on US stock exchanges was 11.19 billion shares, compared to the average of 13.27 billion shares for the entire session over the last 20 trading days.

(History is refiled to change “estimate” to “expectations” in third bullet heading on Nvidia)

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Reporting by Stephen Culp; additional reporting from Anisha Sircar and Devik Jain in Bengaluru; edited by Jonathan Oatis

Our standards: Thomson Reuters Trust Principles.

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