Wall Street Rises Ahead of Federal Reserve Rate Decision

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The US stock markets started the day with gains on Wednesday. Fears of bankruptcy of Chinese real estate developer Evergrande ebbed after reports that the company had reached an agreement with a group of bondholders to whom it was soon to make interest payments. However, investors on Wall Street are mainly focused on the Federal Reserve.

 

This American umbrella organization of central banks will make its interest rate decision during the trading day. Investors are especially looking forward to what the Fed says about the so-called ‘tapering’, the phasing out of corona support. However, the general expectation is that this will not be announced until the next meeting in November at the earliest.

The Dow Jones Industrial Average rose 0.7 percent to 34,145 points in the first few minutes of trading. The broad-based S&P 500 was up 0.5 percent to 4373 points, and tech Nasdaq rose 0.3 percent to 14,787 points.

Parcel delivery company FedEx opened the books for the past quarter and had higher sales. However, due to the increased costs of labour, profits fell. Rate hikes are unlikely to offset that cost increase, as FedEx also lowered its full-year profit forecast, losing 7.6 percent. Industry partner UPS fell with it: minus 3.3 percent.

Software company Adobe also came up with numbers and outperformed analysts’ expectations. They were nevertheless disappointed because Adobe only just exceeded expectations, and the margin was not greater. As a result, the stock fell 3.6 percent.

According to American justice, American Airlines was in the spotlight because an alliance with industry peer JetBlue violates competition rules. According to the Justice Department and several state prosecutors, the two wanted to coordinate flights in the northeastern United States, which amounts to a merger in the Boston and New York region. As a result, they claim that travellers in that region are disadvantaged.

American Airlines plans to do battle with the government. “They’re wrong, and we’re going to prove it,” the airline’s chief executive Doug Parker told the Washington Post. The shares of American Airlines rose 1.5 percent. That of JetBlue was set 1.3 percent higher.

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