After the comments stated by Federal Reserves President John Williams, Wall Street took his statements positively and performed better the following day. Williams explained how the fed rate cut is needed to improve the current economic status. Policymakers need to take the initiative before economic setbacks arise and potentially boost the stock market.
Wall Street Reacts with Open Arms
Independent Advisor Alliance Chief Investment Officer Chris Zaccarelli expressed his take on what Williams said, “He’s toeing the party line at the Fed, basically implying that an insurance rate cut is the right thing to do for the economy at this point in time.” The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite increased by 0.36 percent or 3.12 points, 0.01 percent or 3.12 points, and 0.27 percent or 22.04 points respectively.
Other stocks have presented favorable news on Thursday. Philip Morris International Inc. is a tobacco organization that increased by 8.2 percent. Union Pacific Corp had shown positive progress as well when it earned profit ahead of time and contributed to a 5.9 percent market value increase. International Business Machines Corp. got an assist from its cloud platform and went up by 4.6 percent. Morgan Stanley also reported better progress in its quarterly profit and increased by 1.5 percent.
Cresset Asset Management Chief Investment Officer Jack Ablin shared his thoughts on the bullish reaction of the stock market on the overall economy, “I suppose the good news is expectations were pretty low coming into this season’s earnings. Analysts had expected a negative decline in profit year over year, and so right now it looks like the earnings results themselves are better than expected.”
Before William’s Remarks to the Fed Rate Cut
Other stocks were not performing above standards before Williams talked about the low inflation rates. Shares of Netflix fell by 10.3 percent that resulted from a small quarterly profit. Albin described the situation between Netflix and its subscribers, “I think there was this assumption that no matter what happened globally that people would sit at home and watch television and tune in to Netflix. I think that investors have viewed these large-cap growth technology companies as somewhat defensive.”
The shares of United Health Group Inc. also fell by 2.3 percent when it announced that the company wouldn’t hit the expected revenue mark. While earnings of stocks on Wall Street are expected to weaken again, S&P 500 companies expect an 0.6 percent increase in profits for the upcoming quarter this year.