US open: Stocks edge up even as Fed's Bullard calls for faster rate hikes

By Sharecast News

Sharecast News | 22 Feb, 2023

23:28 20/12/24

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Wall Street's main indices were trading slightly higher on Wednesday after the head of the Federal Reserve Bank of St.Louis called for a quicker pace of interest rate hikes.

"[James] Bullard is one of the more hawkish members [of the Federal Open Market Committee], so if he thinks we only have a little ways to go here, the peak in rates might be properly priced in," said Edward Moya at Oanda.

As of 1558 GMT, the Dow Jones Industrials was edging up by 0.11% to 33,161.08, the S&P 500 was up by 0.03% to 3,998.97 and the Nasdaq Composite was adding 0.14% to 11,506.69.

Front-dated West Texas Intermediate crude oil futures were down by 2.07% to $74.78 a barrel on the NYMEX.

In parallel, the yield on the benchmark 10-year US Treasury note was off by six basis points to 3.896%.

Significantly, while arguing for faster hikes now, Bullard reportedly also called for a so-called terminal rate of around 5.4%, which was only a touch above the 5.25-5.5% already priced into markets.

The day before stocks on Wall Street had suffered their biggest one-day drop year-to-date as strong survey data pushed fed funds futures to price out the possibility of a rate cut in 2023.

Speaking to CNBC, St.Louis Fed chief, James Bullard, reportedly said: "If inflation continues to come down, I think we’ll be fine.

"Our risk now is inflation doesn’t come down and reaccelerates, and then what do you do? We are going to have to react, and if inflation doesn’t start to come down, you know, you risk this replay of the 1970s [...] and you don’t want to get into that. Let’s be sharp now, let’s get inflation under control in 2023."

As an aside, two days before it was reported that the widely-followed Homebase survey was pointing to a 200,000 increase in non-farm payrolls for the month of December.

Such a reading, which was by no means guaranteed, would be nearer the trend seen during the end of 2022.

On the corporate side of things, shares of Intel were dipping by 0.29% to $25.99 after announcing a two-thirds reduction to its quarterly dividend payout.

That was the chipmaker's first cut since 2000.

Still ahead for 1900 GMT was the release of the minutes of the Fed's last rate-setting meeting on 31 January-1 February.

Dow Jones - Risers

Procter & Gamble Co. (PG) $141.50 1.14%
Home Depot Inc. (HD) $298.50 1.02%
Coca-Cola Co. (KO) $60.30 0.84%
Merck & Co. Inc. (MRK) $109.98 0.83%
3M Co. (MMM) $110.01 0.70%
Salesforce.Com Inc. (CRM) $162.68 0.66%
Verizon Communications Inc. (VZ) $39.42 0.55%
Boeing Co. (BA) $206.53 0.49%
Johnson & Johnson (JNJ) $158.71 0.45%
Travelers Company Inc. (TRV) $186.03 0.42%