April 25, 2024

Nasdaq Declines With Dollar And Oil Rises

On Monday, US equities had a choppy trading session, which saw Nasdaq end the day lower, ahead of a busy week filled with an earnings reports from the technology sector. Meanwhile, US Treasury yields and oil prices climbed, as investors were girding for a rate hike from the Federal Reserve in this week’s meeting.

Different aspects

The US dollar index, which had hit a high of 20 years this month, declined slightly and a fall was also recorded in gold prices. US Treasury Janet Yellen spoke on Sunday and said that even though there was a slowdown in the US economy, this did not make a recession inevitable. Treasury yields rose, with investors gearing for the US Fed to boost the interest rates by 75 basis points this week and there are also those concerned about recession.

Investors were also preparing for the second quarter earnings report of some big companies, such as Microsoft Corp., Amazon.com Inc., and Apple Inc., along with GDP data for the second quarter. Market analysts said that people were awaiting developments and taking off some risks before posting their earnings. The increase in interest rates is likely to benefit value names, such as banks.

Index performance

A 0.28% gain in the Dow Jones Industrial Average saw it go up by 90.75 points to reach 31,990.04, while a 0.13% advancement in the S&P 500 saw it add 5.21 points to reach 3,966.84. Meanwhile, the Nasdaq Composite shed 0.43%, which saw it come down by 51.45 points to end the day at 11,782.67 points.

A widely watched survey earlier showed that business morale in Germany had declined more than expected this month, as potential gas shortages and high energy prices take the biggest economy in Europe close to a recession. However, there was a 0.13% gain in the continent-wide STOXX 600 index, while a 0.01% gain was also recorded in the MSCI’s index of global stocks.

European investors’ mood was weighed down due to the German data, along with a number of downbeat earnings. Moreover, a survey over the weekend also showed that surging energy prices had pushed some German industrial companies to cut back their production.

Currency performance

There was a 0.253% decline in the US dollar index, which measures the currency against a basket of others and a 0.13% gain was seen in the euro, which took it to $1.0223. There was a 0.45% drop in the Japanese yen against the greenback, which brought it to 136.6. As for Sterling, it recorded gains of 0.42% on the day to reach $1.2053.

Market analysts said that the US dollar was down from its highs because of pre-Fed caution. This is because the markets are eager to see if the hawkish rate path of the Fed has changed in any way because of the softer data. While the economy has shown solid momentum, there is no denying that the high-interest rates and surging inflation is taking a toll. Meanwhile, oil prices climbed on Monday, thanks to a weaker US dollar.

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