While investors were worried about a slowing economy and rising trade tensions in recent days, optimism returned to Wall Street on Wednesday. Technology shares in particular drove the prices after new inflation figures from the United States turned out more favorably than expected. This fed the hope for smoother interest policy of the Federal Reserve (FED).
Inflation is lower than expected
Consumer prices in the US have risen less sharply than economists had foreseen. This could give the central bank more room to lower interest rates later this year, which can be an incentive for the stock markets. Nevertheless, uncertainty remains, because President Donald Trump’s new import duties on steel and aluminum, among other things, can reinforce inflation.
The Dow-Jones Index closed the trading day 0.2 percent lower at 41,350.93 points. The S&P 500, on the other hand, won 0.5 percent to 5599.30 points, while the Nasdaq rose by 1.2 percent to 17,648.45 points. With that, the stock market recovered somewhat of the losses earlier in the week, caused by worries about a trade war and a weakening American economy.
Methering measures from Europe and Canada
The attention of the markets also went to the countermeasures on the American taxes. The European Commission announced that it would tax 26 billion euros in American goods in response to import duties. Canada, too, did not let itself be unknown and introduced its own import duties on American products worth around 19 billion euros. These taxes include computers, sports items and cast iron products.
Canada is the largest foreign supplier of steel and aluminum to the United States and warned that the measures can have a significant effect on North American trade. Nevertheless, investors remained optimistic, thanks in part to the strong performance of tech companies.
Tech companies in the Lift
Within the technology sector, chip companies were mainly the best. Nvidia saw its shares rise by 6.4 percent while Tesla recovered with a profit of 7.6 percent, after the shares of the electric car manufacturer were under considerable pressure earlier in the week.
In the coming months it will have to be seen how trade tensions and monetary policy decisions influence the markets. For now, Wall Street seems somewhat reassured, but the uncertainty remains. Investors follow the developments on inflation, interest and trade closely.
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Source: https://newsbit.nl/techsector-trekt-wall-street-omhoog-na-inflatiecijfers-en-handelsspanningen/
