Stock Markets Rest Before Fed Rate Decision

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Stock Markets Rest Before Fed Rate Decision
Stock Markets Rest Before Fed Rate Decision

Investors on Wall Street have been in the limelight after the recent record run. Their attention is focused on the interest rate decision of the US central bank and its monetary policy outlook in the middle of the week. Although the US leading index Dow Jones Industrial and the broader S&P 500 first reached new records in early trading on Monday, then the profits crumbled.

The Dow Jones gained 0.20 percent to 19796.43 points. The S&P 500 turned into the minus and fell by 0.11 percent to 2256.96. The Nasdaq 100 went down by 0.44 percent to 4874,298 points.

Focus on Federal Reserve Outlook

A second interest rate increase in the US after the financial crisis is almost certain. The Fed’s further course will be more interesting. Unicredit’s chief economist, Erik Nielsen, expects signals for two increases in 2017 and three others in 2018, but he believes the Fed is likely to be wrong. If the economy under Trump actually takes off, it should take more than these five interest rate hikes. But if everything turns out to be an illusion and the “reality TV show” stops in 2017, the Fed is likely to ignore further interest-rate hikes, Nielsen wrote in a weekly commentary.

The hope for a more attractive economic development in the US has been driving the stock markets since Donald Trump’s win in the White House. Trump had promised, among other things, to spend a lot of money on the improvement of the infrastructure. Investors expect positive impulses for the entire US economy.

EXXONMOBIL and CHEVRON Benefit from Oil Price Rise

A certain amount of support was provided at the start of the week by rising oil prices, which benefited from announced reductions in the oil producing Opec and other important exporting countries. The shares of ExxonMobil and Chevron were among the favorites in the Dow Jones with gains of more than 2 percent and 1 percent respectively.

The papers of the Pfizer pharmaceutical group, which raised its quarterly dividend as expected, were also in demand. The papers rose by more than 2 percent.

The Chipotle Mexican Grill fast-food chain’s shares rose by 3.37 percent. The founder Steve Ells will lead the company alone after the resignation of co-boss Monty Moran. In the course of the year, however, the share remains clearly in the negative, after the 2015 E-coli bacteria infections.

LOCKHEED MARTIN Under Pressure After Trump Criticism

Lockheed Martin, meanwhile, was confronted with criticism by Donald Trump, who complained about high costs for the F-35 fighter jets. The securities fell by a good two and a half percent. This showed the power of Trump’s words. The new president had recently criticised the pricing of the 747 Air Force One. Boeing was then noticeably under pressure.

Among the shareholders of the media group Viacom, the possible merger with the industry colleague CBS caused disappointment. The price slipped by 7.54 percent.

EURO Somewhat Recovered

The euro continued its recovery attempt in the US trade, trading recently at 1.0634 US dollars. On the US bond market, the price of ten-year government bonds fell by 2/32 points to 95 26/32 points. Their return was 2.48 percent.

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Ben has a Master's degree in Finance. He is passionate about the stock market, being an investor himself. In his free time, he likes to hike and spend time with his family.

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