A Wall Street sign in New York
by Stephen Culp
The New York Stock Exchange ended sharply lower on Wednesday after the end of the meeting of the American Federal Reserve (Fed), which left its rates unchanged, as expected, but suggested that a first cut was not imminent, dampening hopes of a more accommodating turn in its monetary policy from March.
The Dow Jones index fell 0.82%, or 317.01 points, to 38,150.30 points.
The broader S&P-500 lost 79.32 points, or 1.61%, to 4,845.65 points.
The Nasdaq Composite fell 345.88 points (2.23%) to 15,164.01 points.
The three main indices on Wall Street were already in decline before the press release from the American central bank, due to the weakness of large technology stocks and other securities in the sector following the disappointing results published the previous evening by Alphabet.
They continued to decline as the press conference of Fed boss Jerome Powell, who stressed that the institution wanted additional certainty on inflation to reduce rates, ruling out a first cut in March .
“There are no surprises in the Fed’s statement,” commented Oliver Pursche, vice president of Wealthspire Advisors in New York. “Additional rate hikes seem out of the question, which is positive, but investors should expect higher (rates) for longer while we are still a little removed from economic data that would push the Fed to lower rates rate”.
The Fed maintained its key rate at 5.25%-5.50% for the fourth consecutive meeting, amid a gradual slowdown in inflation and the resilience of the US economy.
But by indicating in its press release that it was waiting to have “more confidence” in the decline in inflation before lowering rates, the American central bank dealt a blow to the markets, which had recently been banking on an initial drop in rates. rate from March.
“The good news is we can forget about any further tightening,” noted Art Hogan, chief strategist at B. Riley Wealth in New York. “The bad news is that the timing of a rate cut has been pushed back beyond what seemed a consensus.”
Despite their decline today, the main Wall Street indices recorded an increase at the monthly level.
Economic data published today suggest less pressure on the American labor market, which the Fed considers to be an essential condition for bringing inflation back to its 2% target.
All eleven major sectors of the S&P-500 ended the session in the red, with communications services and technologies suffering the biggest declines.
Alongside the Fed meeting, the week is animated by the quarterly results season, which is gaining in intensity. Of the 176 companies that have already published their results, 80% have beaten expectations, according to LSEG data.
Analysts now anticipate growth in turnover of S&P-500 companies of 6.1% year-on-year, compared to 4.7% initially.
After publishing disappointing quarterly advertising sales the day before after the close and saying it anticipated an increase in investments linked to artificial intelligence (AI), Alphabet declined by 7.5%.
While it also announced increased costs to develop features using AI, Microsoft rose 2.7% after reporting quarterly results that were better than expected.
(French version Jean Terzian)