NEW YORK: Tech shares powered higher on Thursday (June 22) as markets shook off recent weakness even as the Bank of England (BoE) and other central banks increased interest rates again to counter inflation.
Google parent Alphabet rose 2.2% and Amazon won 4.3% as the S&P 500 and Nasdaq broke a three-day losing streak.
The Dow Jones Industrial Average fell 4.81 points, or 0.01%, to 33,946.71, the S&P 500 gained 16.2 points, or 0.37%, to 4,381.89 and the Nasdaq Composite added 128.41 points, or 0.95%, to 13,630.61.
The gains came as Federal Reserve (Fed) officials continued to vow an aggressive stance on inflation. Fed governor Michelle Bowman said more rate increases were probably needed “to meaningfully and durably bring inflation down”.
But investors are sceptical the Fed will follow through.
“Investors are playing tug of war, as if they’re pulling petals from a daisy saying ‘bull market, not a bull market’,” said Sam Stovall, chief investment strategist of CFRA Research in New York. “We don’t have much to trade on, second-quarter earnings don’t start in a couple weeks yet.”
“The market believes the Fed will raise rates one more time, not two more times as implied by the post FOMC meeting summary,” he added. “In addition, yesterday and today’s, Powell reiterated that they will be data dependent and Wall Street expects inflation to cool faster, and unemployment will start to creep higher which is what the Fed has intended with its rate increases.”
Among individual companies, Boeing shares shed 3% after Spirit AeroSystems, a key supplier on the 737 MAX, announced it was suspending factory production.
This came after workers represented by the International Association of Machinists and Aerospace Workers rejected a new contract.
Spirit shares dropped 9.5%.
Banking shares were under pressure as Martin Gruenberg, head of the Federal Deposit Insurance Corporation, said regulators were considering new capital requirements on larger banks.
JPMorgan Chase, Bank of America and Goldman Sachs all lost more than 1.5%. – AFP, Reuters
