The historic decision by the US Federal Reserve to give more leeway to its inflation target brought a tailwind to Wall Street on Thursday. The Dow Jones Industrial Average (INDEXDJX: DJI) increased by 0.57 percent to 28,492.27 points. The New York price barometer did better this time than the recently highly sought-after technology stocks.
The tech-heavy Nasdaq 100 (INDEXNASDAQ:NDX) made the next record early on. For the first time above the 12,000 point mark, however, it quickly ran out of breath. In the end, it was down 0.38 percent to 11,926.16 points. The market-wide S&P 500 closed 0.17 percent higher at 3484.55 points. It too had continued its record rally.
The Fed fulfilled the latest speculation on Thursday by announcing that the two percent mark should in future be an average target and not a fixed target. According to Ralf Umlauf from Helaba, this will reduce the pressure to take countermeasures by raising interest rates after a phase of low inflation. In the market, this was seen as a strong sign of an unbroken loose monetary policy.
Under the new definition, the Fed can accept higher inflation for a longer period of time if it was previously below this target for a longer period of time. In an eagerly awaited speech at an annual central bank meeting, however, Chief Monetary Guard Jerome Powell relativized the significance a little by saying that inflation should only rise moderately above the target.
Among tech stocks, some continued their record rally, including Tesla’s stocks , Amazon and Microsoft . The latter made it with 2.5 percent among the bigger Dow winners. Dealers referred to a report according to which the software giant is about to take over the US business of the Chinese video app Tiktok.
Microsoft now wants to do common cause with Walmart. Here the stocks benefited from this prospect even more than Microsoft, by rising 4.5 percent at the top of the Dow. According to UBS analyst Michael Lasser, such a deal can be beneficial for the retail group’s marketplace and advertising strategy. In addition, reaching a younger target group is important for Walmart in the long term.
Abbott Laboratories (NYSE:ABT) shares jumped in the wider market up by almost eight percent. The pharmaceutical company has received emergency approval from the US FDA for an affordable rapid coronavirus test. The low sales price and the statement that it should deliver a result within 15 minutes caused a stir.
As a result, shares from the aviation and travel industries were in general high demand on Thursday. Here Abbott’s success gave hope that cheap mass testing could revive business. For the shares of American Airlines and United Airlines listed on the Nasdaq it went up to 5.8 percent. The shares of hotel chains like Marriott or cruise operators like Carnival also rose.
Beyond Meat shares went up with a price increase of 5.3 percent. The meat substitute specialist announced the introduction of a new online platform that will enable consumers to purchase products directly. Barclays analyst Benjamin Theurer believes the move will bring market share gains and better household penetration.
Otherwise, some number templates from the second row of exchanges painted a mixed picture. The stocks of the clothing chain Abercrombie & Fitch shot up 8 percent thanks to a surprising quarterly profit. The cosmetics company Coty, however, disappointed its investors, here the shares went down by eight percent.