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Market Wrap: Stocks, Bonds, Commodities
On Wednesday, U.S. stocks posted an intraday reversal to the downside after investors digested Federal Reserve Chair Jerome Powell's hawkish post-rate-hike comments. The Dow Jones Industrial Average closed 142 points lower (-0.42%) to 33,966, the S&P 500 fell 24 points (-0.61%) to 3,995, and the Nasdaq 100 slid 93 points (-0.79%) to 11,740.
As widely expected, the Federal Reserve raised its key interest rates by 50 basis points to 4.25-4.50%. The Fed now projects the key rate to reach 5.10% by the end of 2023.
And Jerome Powell pointed out the central bank will not cut interest rates until its inflation target of 2% is reached.
The U.S. 10-year Treasury Yield dropped 2.9 basis points to 3.472%.
Automobiles (-2.14%), diversified financials (-1.56%), and semiconductors (-1.49%) sectors lost the most.
Tesla (TSLA) sank a further 2.58% after Goldman Sachs lowered its price target on the stock.
Marriott International (MAR) fell 2.32% as the hotel operator was downgraded to "neutral" at Citi.
On the other hand, Delta Air Lines (DAL) rose 2.79% as the airline gave a better-than-expected full-year guidance on adjusted earnings per share.
Pfizer (PFE) gained 2.66% on reports that the drugmaker has been allowed to import and distribute antiviral drug Paxlovid in China.
European stocks also closed lower. The DAX 40 fell 0.26%, the CAC 40 dropped 0.21%, and the FTSE 100 dipped 0.09%.
U.S. WTI crude futures added $2.00 to $77.38 a barrel. The U.S. Energy Department reported an addition of 10.23 million barrels in crude-oil stockpiles, in contrast to a reduction of 3.59 million barrels expected.
Gold price declined $3 to $1,807 an ounce.
Market Wrap: Forex
The U.S. dollar softened against other major currencies. The dollar index declined to 103.62.
EUR/USD rose 52 pips to 1.0685. Data showed that the Eurozone's industrial production declined 2.0% on month in October (vs -1.2% expected).
GBP/USD gained 64 pips to 1.2430. In the U.K., the inflation rate slowed to 10.7% on year in November (vs +11.0% expected).
USD/JPY dropped 16 pips to 135.43.
AUD/USD added 9 pips to 0.6864. This morning, Australia's data showed that the jobless rate remained stable at 3.4% in November with employment rising by 64,000 (vs +25,000 expected).
USD/CHF declined 44 pips to 0.9240, and USD/CAD was little changed at 1.3544.
Bitcoin once broke above $18,000 before retreating to $17,800 after the 50-basis-point rate hike was confirmed.
Morning Trading
In Asian trading hours, Japan's data showed that trade deficit narrowed to 2.03 trillion yen in November (vs 1.80 trillion yen expected) with exports increasing 20.0% on year (vs +24.0% expected).
USD/JPY was stable at 135.53.
Australia's data showed that the jobless rate remained stable at 3.4% in November with employment rising by 64,000 (vs +25,000 expected).
AUD/USD declined to 0.6839.
EUR/USD retreated to 1.0655, and GBP/USD traded lower to 1.2392.
Gold price lost again the handle of $1,800 an ounce.
Bitcoin declined further to $17,720.
Expected Today
In the U.K., the Bank of England is expected to raise its key interest rate by 50 basis points to 3.50%.
The European Central Bank is expected to increase its key interest rates by 50 basis points to 2.0-2.5%.
In the U.S., retail sales are expected to grow 0.2% on month in November. The latest number of initial jobless claims is expected at 235,000.
The New York State manufacturing index is expected to fall to 1.0 in December, while the Philadelphia Fed manufacturing index is expected to improve to -7.0 in December. | | |
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