US Markets Experience Turbulent Session Following Comments from Fed Chairman Powell

Following comments by Jerome Powell, chairman of the U.S. Federal Reserve, the U.S. stock markets experienced a rollercoaster ride. Though he characterized a rate hike as initially 'unlikely' and anticipates a decline in inflation over the course of the year, resulting gains could not be sustained by the close of trading. The markets initially interpreted these statements positively, and there was a glimmer of hope that the aggressive interest rate policy might ease, which temporarily caused the Dow Jones Industrial Average to rise almost 1.5 percent. However, the index closed just slightly up at the end of the day, while the S&P 500 and the Nasdaq 100 recorded losses. According to portfolio manager Thomas Altmann, especially the announced slower reduction of the holdings of government bonds is a signal to the markets that the Fed wants to regain control over the long end of the yield curve. The already existing inflation and the consistently robust economic growth of the U.S. had already dampened expectations of imminent rate cuts. A first rate move is not expected before late summer, while thinner trading volumes due to holidays in parts of Asia and Europe should be noted. There was pleasing news for certain stocks: Microsoft, Amazon, Johnson & Johnson, Boeing, and 3M provided a lift in the Dow. Amazon impressed with a significant revenue increase in the first quarter, particularly through the growth of the cloud division AWS, despite a rather cautious revenue forecast for the next quarter. The J&J paper experienced growth and is in the light of settlement negotiations regarding the allegedly asbestos-tainted baby powder. Microsoft delighted investors with a record contract in the area of clean energies, while a success for Boeing in spaceflight and an upgrade for 3M set further positive impulses. Also in focus were Pfizer and Dupont in the S&P 100, which impressed with strong figures and raised full-year forecasts. Moreover, the biggest IPO of the year so far in the U.S. for Viking Holdings, which concluded with an increase in share price, should not go unmentioned. The European currency, the euro, was strong at times, well over 1.07 dollars, but was last traded somewhat weaker. The futures contract for ten-year government bonds, the T-Note Future, increased, while the yield on corresponding government securities fell.