Several central banks from across the world also raised interest rates today, including England and Switzerland. Japan, however, kept interest rates steady, while Turkey's central bank unveiled another surprise interest rate cut.
The Bank of England raised interest rates by 0.5 percentage points to 2.25 %, and alluded to another large rate hike in November to curb inflation. The Swiss bank chose a 0.75% increase.
Investors were hoping that Powell would come up with a comment yesterday that would make the stock market bounce back. But he made it clear that it wasn't the time yet because prices haven't stabilized. Worse, he even said that some pain was expected, and it might last a little longer than expected. The Fed knows that it needs to dry up liquidity more to bring price movements back within an acceptable limit.
Although he was a bit more pessimistic than expected about the efforts required, he still believes that tight monetary policy will not lead to a recession in the US. As a result of this speech, the dollar continued to crush other currencies. Also, the slider for the expected top rate level has moved from 4.5% to 4.6% (compared to the current range of 3 to 3.25% after yesterday's increase). The yield on US 10-year debt changed little, remaining around 3.54%, but the yield on 2-year debt has soared to 4.11%.
Economic highlights of the day:
The dollar remains strong and is worth EUR 1.0139. The ounce of gold is trading at EUR 1677. Oil is recovering slightly from its decline, with North Sea Brent crude at USD 92.33 per barrel and U.S. light crude WTI at USD 85.52. The yield on 10-year US debt is little changed at 3.55% and the 2-year yield is accelerating to 4.11%. Bitcoin is trading around USD 18,700.
In corporate news:
* Tesla has issued a recall of nearly 1.1 million vehicles sold in the U.S. because of a software problem with the window system, according to the U.S. National Highway Traffic Safety Administration (NHTSA).
* Amazon, Microsoft, Alphabet - British media regulator Ofcom said Thursday it is investigating competition in cloud services dominated by the three U.S. groups, which account for about 81 percent of the industry's revenue.
* Salesforce jumped 16% in premarket trading as the software company said Wednesday at an investor day that it expects revenue to reach $50 billion by 2026, representing annual growth of 17%.
* Accenture lost 2% in premarket trading after the IT services consulting firm issued a lower-than-expected revenue guidance range for the fiscal first quarter.
* United Airlines said Wednesday it is working on resuming flights to Cuba later this year, which have been suspended since March 2020 due to the Covid-19 outbreak.
* Target said Thursday it plans to hire up to 100,000 seasonal workers for the holiday season and wants to bring forward the launch of its promotional offers compared to the schedule of previous years amid the economic downturn.
* Pfizer announced Thursday that it plans to deliver up to six million doses of its COVID-19 antiviral treatment to the Global Fund, a Swiss NGO that seeks to address disparities between rich and poor countries in the fight against the pandemic.
* Spero Therapeutics jumped 96% in pre-market trading after the British laboratory GSK announced that it had taken an equity stake in the company as part of a licensing agreement for its experimental antibiotic for complicated urinary tract infections.
* Nike - The sports equipment maker's stock is up 1.2% in premarket trading, with RBC initiating an "outperform" rating on the stock with a price target of $125.
* KB Home - The company's stock is down 2% in premarket trading after reporting lower-than-expected quarterly sales.
- Berkshire Hathaway: Edward Jones upgrades to buy from hold.
- CBRE Group: UBS adjusts price target to $86 from $95, maintains neutral rating.
- Ceres Power: RBC starts sector performance tracker targeting GBp 600.
- Compass: AlphaValue moves from sell to accumulate targeting GBp 2054.
- Crocs: Exane BNP Paribas initiated coverage of Crocs Inc. with a recommendation of neutral. PT set to $79.
- Dianomi: Liberum remains Buy with a price target reduced from GBp 460 to GBp 300.
- FirstGroup: J.P. Morgan resumes monitoring at Overweight, targeting GBp 155.
- Glencore: J.P. Morgan remains Overweight with a price target raised from GBp 5900 to GBp 6400.
- MetLife: Raymond James initiated coverage of MetLife Inc. with a recommendation of market perform. PT up 13% to $73.
- The Estee Lauder Co: Goldman Sachs upgrades to buy from neutral, increases pt to $303 from $298
- Voya Financial: Raymond James initiated coverage with a recommendation of strong buy. PT up 34% to $84.