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Traders react as the Federal Reserve’s interest rate announcement appears on the screen on the floor of the New York Stock Exchange (NYSE) on December 13, 2023 in New York City, USA.
Brendan McDiarmid | Reuters
Market opens lower for the week
U.S. stocks rose on Tuesday after Federal Reserve officials said the central bank’s rate-cutting cycle could be slower than Wall Street expected as investors watched fourth-quarter results. It started the shortened week lower while tracking a rise in savings yields. European shares ended lower, with fashion brand Hugo Boss falling 9% after reporting a weaker-than-expected profit.
Fed rate cuts slowing down
Federal Reserve President Christopher Waller said there will be monetary easing this year, but the central bank may ease monetary policy at a slower pace. “In many previous cycles, the FOMC has cut rates reactively, cutting rates quickly and frequently and significantly.” I see no reason to do so.”
growth of china
Speaking at the World Economic Forum in Davos, Switzerland, Chinese Premier Li Qiang said China’s economic growth rate in 2023 will be around 5.2%, slightly higher than the official target of around 5%. The announcement comes as the Chinese government is scheduled to release official GDP statistics on Wednesday. According to a Reuters survey, China’s growth rate in 2023 is expected to be 5.2%. Premier Lee also said technological innovation should not be used as a means to contain or restrict other countries.
More profits for big banks
Goldman Sachs and Morgan Stanley reported their results on Tuesday, summarizing the results of six of Wall Street’s biggest financial institutions. Morgan Stanley’s fourth-quarter sales beat analysts’ expectations, but the bank warned of economic and geopolitical risks. Goldman Sachs reported higher-than-expected growth in asset and asset management revenue.
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Wall Street was on its first day back after a long weekend and was rudely woken up by a reality check from Fed officials.
The blue-chip Dow Jones Industrial Average closed 0.62% lower, while the S&P 500 fell 0.37%. The Nasdaq Composite Index, which has a high proportion of high-tech stocks, ended down 0.19%.
Federal Reserve President Christopher Waller said there was “no reason” for the central bank to “act so quickly” to cut interest rates this year. His comments were in stark contrast to the aggressive policy easing that markets are expecting this year.
Traders still think there is a more than 64% chance the Fed will cut interest rates by 25 basis points to a range of 5% to 5.25% at its March meeting, according to CME Group’s FedWatch tool. Those expectations were sharply lowered after data showed that producer prices unexpectedly fell in December, putting the probability of a rate cut at nearly 77% on Friday.
Looking across the Atlantic, there was more discussion on the second day of the World Economic Forum in Davos.
Artificial intelligence remains a hot topic, with Microsoft CEO Satya Nadella advocating for its use, noting that more countries are now discussing AI in similar ways.
“I think [a global regulatory approach to AI is] This is very desirable because we now consider these to be global challenges that require global norms and global standards,” Nadella said.
Microsoft is a big player in the AI arms race.
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