Investor optimism skyrocketed as U.S. markets opened higher today, propelled by positive corporate earnings and encouraging results from Meta Platforms Inc. Pre-market trading saw the S&P 500 futures rise by 0.59%, and Nasdaq 100 E‑Mini futures increase by 1.20%.
The increase followed a mixed regular session as investors processed the Federal Reserve’s recent rate hike, raising interest rates by a quarter-point to a range of 5.25% to 5.50%, a level last seen just prior to the 2007 housing market crash and which has not been consistently exceeded for about 22 years. Meanwhile, investors eagerly awaited key U.S. economic data.
Meta Platforms Inc (META) became the center of attention after it reported better-than-expected Q2 results and issued upbeat Q3 revenue guidance, propelling the company’s shares to surge over 7% in pre-market trading.
Federal Reserve Chair Jerome Powell’s recent comments hinted at the possibility of further rate hikes, but also assured investors that the central bank carefully assess data and its implications for monetary policy.
Rajeev Sharma, a managing director of fixed income at Key Private Bank, expressed confidence that the rate hiking cycle might be over, leading to yields dipping slightly across the front end of the yield curve.
“In our opinion, the rate hiking cycle is done, and the Fed will now pause for the rest of the year. The latest market reaction also supports this thesis with yields dipping slightly across the front end of the yield curve,” Reuters quoted Rajeev Sharma, a managing director of fixed income at Key Private Bank, as saying.
Wednesday’s trading session witnessed remarkable performances from key players like Boeing Co, Alphabet Inc, and Union Pacific Corporation, contributing to the market’s mixed session. However, Microsoft Corporation and chip stocks faced a slight dip after reporting less-than-stellar results.
Investor focus today is on the release of U.S. GDP preliminary reading, with economists forecasting a growth rate of +1.8% q/q for the second quarter. In addition, U.S. Durable Goods Orders data, U.S. Pending Home Sales data, and U.S. Initial Jobless Claims data are all expected to be closely monitored throughout the day.
In the bond markets, the United States 10-Year rates are at 3.872%, up 0.49%.
Meanwhile, European markets responded positively to comments from Fed Chair Jerome Powell while awaiting the European Central Bank’s interest rate decision. Media and consumer stocks gained ground, while mining and energy stocks underperformed. The European Central Bank is predicted to raise interest rates by another quarter of a percentage point later in the session, and investors await any indications from ECB President Christine Lagarde’s press conference about the future of the tightening cycle.
Asian stock markets closed mixed, with China’s Shanghai Composite Index (SHCOMP) down 0.20% and Japan’s Nikkei 225 Stock Index (NIK) up 0.68%. China’s industrial profits continued to decline, highlighting the need for supportive policies. On a brighter note, Chinese automakers’ shares surged, buoyed by a significant investment from Volkswagen AG.