Beat the Street: Fed fallout; growth tech stocks in focus; strikes set to continue; FedEx
Growth and rate-sensitive stocks have wilted as the Fed left the door open to another rate hike this year. Strikes are set to continue at Ford, GM and Stellantis unless a deal is reached with the unions.
(Partial video transcript)
Fed fallout and wilting growth stocks
Hello, I'm Angeline Long, and welcome to Beat the Street, the show that gives you all the tradable news and data that you need to know ahead of the Wall Street open. Coming up, Federal Reserve fallout, growth stocks wilt as the Fed keeps the door open to yet another hype. Plus, going the distance, how far are strikers willing to go?
US automakers face the threat of lengthy strikes. More details in a moment. And on the corporate front, FedEx in focus after its cost-cut payoff, and it gains on the pain of its rivals.
Now, good afternoon and a very warm welcome to you on this new edition of Beat the Street. Not long now before Wall Street starts trading; let's have a look at how equity markets are looking on the IG platform.
Decline evident on US Tech 100
Let's start with the US Tech 100 first. As you can see here, this is a one-hour chart, and we are seeing somewhat of a decline indicator there. Let's have a look at Wall Street as well; similar picture there.
However, it has to be said that many of the moves that we're seeing post-Fed are to do with rate-sensitive stocks, including Apple, Meta, Alphabet and NVIDIA. They all fell after the Fed kept the door open to one more hike potentially ahead, two-year and 10-year Treasury yields, meanwhile scaled multi-year highs.
Just checking on some breaking news now as we speak, just getting them through. Initial jobless claims for the week ending 16 September 2023: we were expecting 225,000. We got 201,000 instead. That was a surprise on the downside, and perhaps this mirrors the continually robust picture being painted on the US economy.
Labout market strong in the face of cost-of-living crisis
Despite the cost-of-living crisis, despite the headwinds, the higher interest rates, its labour market continues to show signs of resilience.
The US dollar, meanwhile, rose after Jerome Powell delivered a firm hawkish stance. Higher for longer was the message, and updated quarterly projections show that the central bank may still lift rates one more time this year to a peak of 5.5 to 5.75% range. Fed received half a percentage cut in 2024.
As a view, Fed officials had expected to cut rates by a full percentage point next year. Meanwhile, policymakers now see the fight against inflation lasting into 2026 and believe they can succeed without damaging the US economy.
Now, as we are on central bank watch, not too long ago, the Bank of England (BoE) kept rates on hold. The previous 14 times the bank made a decision prior to this, it opted to boost the rates starting at the end of 2021.
Warren Venketas has been tracking the pound's reaction after today's results. Much mixed messaging from BoE officials. Looking at the voter split from the previous meeting, we saw seven members in favor of a rate hike versus two in favor of a pause, and I think that will obviously be more divided going into this particular rate announcement.
I just wanted to touch on a bit of the pound price action. I do have the daily cable chart on screen. We can see the pound being sold off quite drastically, particularly after that Fed rate pause, which included a very hawkish message of higher for longer. I think we could see a bit of that in the BoE's messaging as well today…
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