(New York) The New York Stock Exchange opened higher on Wednesday, beginning a slight rebound helped by statements deemed moderate by the President of the American Central Bank (Fed).
Posted at 9:39
Updated at 10:24 a.m.
Around 10 a.m., the Dow Jones gained 0.87%, the technology-dominated NASDAQ index rose 0.56%, and the broader S&P 500 index rose 0.86%.
After two sessions of declines to start the week, the market got a boost on Wednesday from Fed Chairman Jerome Powell’s opening statements, released ahead of his hearing before the House Financial Services Committee.
The most followed central banker in the world has confirmed that the Fed will indeed raise its key rate at the end of its next meeting, on March 15 and 16.
For Gregori Volokhine, president of Meeschaert Financial Services, “the positive thing for the markets” is the prospect, announced by Jerome Powell, of a soft reduction in the balance sheet of the Fed, a phase which worried investors perhaps more yet rising rates.
“It shows that they are not going to have too tough a policy which would be negative for the markets”, explained the manager. “It’s a sign of caution in realizing that the markets are extremely fragile” against the backdrop of the Ukrainian conflict.
For John Lynch, head of investment at Comerica Wealth Management, operators were still worried about the escalation in oil prices, with a barrel now beyond 110 dollars.
Patrick O’Hare, of Briefing.com, saw some positive signs, such as the possible resumption of talks between Russians and Ukrainians, on the seventh day of the conflict, even if the Ukrainian Minister of Foreign Affairs indicated that no date had been arrested.
“There is also the feeling that stocks have fallen too much and that the mood (of the market) is too negative, which could offer the possibility of a rebound”, also suggested the analyst, in a note.
“What is appearing to investors is that the impact of what is happening in Ukraine will be greater for Europe than for the United States”, explains Gregori Volokhine.
According to FactSet, the exposure of all S&P 500 companies to Russia and Ukraine is only about 1% of their overall revenue.
After having fallen very sharply since Monday, bond rates rose significantly on Wednesday, illustrating a slight upturn in risk appetite. The yield on 10-year US government bonds stood at 1.78%, down from 1.72% on Tuesday.
In terms of macroeconomic indicators, the American ADP employment report, which reported 475,000 jobs created in February, well above the 375,000 expected, went almost unnoticed, according to Gregori Volokhine.
For the moment, “the news is catastrophic […] but it would be enough for there to be ‘good news’” in the Ukrainian dossier, cease-fire or change in Russian policy, “for there to be a rebound like we have never seen”.
The repurchases of securities by investors forced to hedge, because they speculated so far on falling prices would thus be enough, according to the manager, to “propel the markets up by 10 or 15% in five minutes”.
On the stock market, Ford benefited (+6.44% to 17.77 dollars) from the announcement of the creation of an entity dedicated to its electric cars (Ford Model e), distinct from its traditional activities, now gathered under the Ford Blue brand.
ExxonMobil was wanted (+3.40% to 81.86 dollars) despite the announcement of the withdrawal of its last major project in Russia, thus imitating its competitors BP, Shell or Eni.
In general, the inexorable rise in oil prices boosted companies in the sector, from ConocoPhillips (+3.06%) to Halliburton (+3.52%), via Marathon Petroleum (+2.62%).
The department store chain Nordstrom was levitating (+34.95% to 26.37 dollars) after the publication of results above expectations and forecasts deemed positive for the current fiscal year.