Linea Mercati Interview 3/20/25
March 21, 2025
Fed in cerca di chiarezza
March 21, 2025The New York Stock Exchange traded positively on Thursday, the day after the US Federal Reserve (Fed) decided to keep its rates unchanged, driven in particular by the unexpected rebound in existing home sales.
After opening down, the Dow Jones Industrial Average was up 0.34% at 2:20 PM GMT, the Nasdaq Index was up 0.54%, and the broader S&P 500 Index was up 0.32%.
On Wednesday, “the market recovered thanks to the Fed’s continued predictions of rate cuts,” Peter Cardillo of Spartan Capital Securities told AFP.
The Federal Reserve unsurprisingly left its rates unchanged on Wednesday, within a range of 4.25% to 4.50%.
The institution’s officials also maintained their estimate of the number of rate cuts expected throughout the year (a total of half a percentage point).
But Wall Street’s reaction “was somewhat unusual given that the revised forecasts leaned somewhat toward market concerns about stagflation (high inflation combined with weak growth, editor’s note),” wrote Patrick O’Hare of Briefing.com.
Fed officials delivered their first forecasts for the US economy since December and Donald Trump’s inauguration in January.
They show that their confidence in the future has declined.
They anticipate much weaker gross domestic product (GDP) growth, at +1.7% by the end of the year (versus 2.1% previously forecast), and an acceleration in inflation to 2.7% (versus 2.5% in December).
“Uncertainty (is) unusually high” in the United States, declared Jerome Powell, the institution’s chairman, adding, however, that the country “still has solid data.”
According to data released Thursday by the National Association of Realtors (NAR), existing home sales rebounded in February in the United States, and prices continued to climb.
Last month, 4.26 million houses and apartments changed hands at an annualized rate, that is, projecting this sales rate over the entire year.
These figures exceeded market expectations, which had predicted a decline, with an anticipation of 3.95 million homes resold, according to the consensus published by MarketWatch.
Another indicator released early in the day, weekly new jobless claims, showed a slight increase compared to last week (+2,000), below expectations.
For Peter Cardillo, “the market will surely try to continue to recover a little over the next few sessions,” but the analyst does not anticipate this to be sustained.
Investors “still do not know what the effects of the surcharges will be, particularly the reciprocal tariffs that will be implemented in Europe and the United States,” which is causing a form of “fatigue” among them, Mr. Cardillo emphasized.
The European Commission announced on Thursday that it was postponing by two weeks, to mid-April, the entry into force of its countermeasures targeting American products in response to Donald Trump’s 25% tariffs on steel and aluminum.
On the bond market, the yield on ten-year US government bonds eased to 4.20%, compared to 4.24% the previous day at close.
In the stock market, Chinese e-commerce giant PDD Holdings advanced (+1.66%) after reporting a slowdown in revenue growth for the third consecutive quarter on Thursday, as the owner of Temu faced heightened trade tensions with the United States.
Semiconductor manufacturer Microchip Technology was underperforming (-5.27%) after announcing the issuance of $1.35 billion in convertible shares, the proceeds of which will be used to repay its debt.
Elsewhere, US cloud computing startup CoreWeave plans to raise approximately $2.4 billion, at a midpoint of the range of $51 per share, during its initial public offering.
The group would then be valued at $24.2 billion in total, taking into account all the shares in circulation.
