Wall Street rises after Powell’s comments fuel hopes that Fed will delay rate hikes – October 19, 2023 at 6:45 p.m.

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*Netflix beats subscriber estimates in Q3

* Tesla declines after disappointing quarterly numbers

* AT&T increases its annual free cash flow forecast

* Indices rise: Dow Jones 0.17%, Standard & Poor’s 0.13%, Nasdaq 0.13%

Oct 19 (Reuters) – Wall Street’s main indexes rose on Thursday after Federal Reserve Chairman Jerome Powell said the U.S. central bank would “proceed cautiously” in raising interest rates again.

Big-cap stocks, with the exception of Tesla, turned positive after Powell’s prepared remarks to the Economic Club of New York.

Traders now see a 68% chance of no rate hike in December, compared to a roughly 50% chance before Powell’s comments, according to CME’s FedWatch tool, while bets on a pause in November remained unchanged.

However, Powell added that the strength of the economy and continued tight labor markets could justify further rate hikes by the Federal Reserve.

“Powell is still leaving options open for the Fed regarding future rate hikes, but he has not changed the narrative that the Fed will leave rates unchanged at its next meeting and that they are relatively likely to do so for the rest of this year,” he said. Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.

The electric vehicle (EV) maker’s stock fell 9.0% after the company missed Wall Street estimates for third-quarter gross margin, earnings and revenue.

Netflix shares rose 15.3 percent after the largest live streaming company in the world by number of subscribers said it was raising the prices of some of its subscriptions in the United States, Britain and France after adding nine million users in the third quarter.

Third-quarter earnings for S&P 500 companies are now expected to rise 1.6%, compared to expectations for a 2.2% increase last week, LSEG data showed.

The two-year bond yield, which better reflects short-term interest rate expectations, fell, while the 10-year bond yield rose to 4.9215%, near the 5% level last seen in 2007.

“Will the 10-year bond yield exceed 5%? I think the answer to that is yes, that could in turn lead to more volatility,” said Russell Hackman, chairman of Hackman Wealth Partners.

Investors are now waiting for other Fed officials, including Austin Goolsbee, president of the Chicago Fed, Atlanta’s Raphael Bostic and Philadelphia’s Patrick Harker, to speak later in the day.

The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, signaling another month of strong job growth, while existing home sales in the United States fell to a 13-year low in September.

At 12:16 p.m. EDT, the Dow Jones Industrial Average rose 58.52 points, or 0.17%, to 33,723.60, the S&P 500 rose 5.57 points, or 0.13%, to 4,320.17, and the Nasdaq Composite rose 17.06 points. , or 0.13% to 4320.17 points. 13,331.36.

Communications and information technology services led gains among major sectors in the S&P 500.

In terms of profits, Blackstone’s stock fell 6.0%, with the distributable dividends of the world’s largest private equity company falling more than expected in the third quarter due to a decline in asset sales in its real estate activity.

Lam Research fell 6.0% after the chipmaking equipment supplier forecast second-quarter revenue slightly below Wall Street estimates.

AT&T stock rose 7.3% after the telecommunications company raised its annual free cash flow forecast.

Declines were 1.14 to 1 on the New York Stock Exchange and 1.28 to 1 on the Nasdaq.

The S&P recorded two new 52-week highs and 27 new lows, while the Nasdaq recorded eight new highs and 268 new lows. (Reporting by Shubham Batra and Shishwat Chauhan in Bengaluru; Editing by Dhanya Ann Topel, Soumyadeep Chakrabarti and Vinay Dwivedi)