Wall Street ends up, satisfied by a further deceleration in inflation

Wall Street ends up, satisfied by a further deceleration in inflation

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The Dow Jones rose 0.64%, as did the Nasdaq, while the broader S&P 500 index gained 0.34%.

The New York Stock Exchange ended higher on Thursday, satisfied with the confirmation of a deceleration of inflation in the United Stateswhich maintains the hope of a better year 2023 than initially expected.

The Dow Jones rose 0.64%, the Nasdaq index rose 0.64% and the broader S&P 500 index gained 0.34%.

The event of the day, expected for several days, was the publication of the CPI price index, which came out down 0.1% over one month in December, in line with economists’ forecasts.

Over one year, inflation fell to 6.5%, against 7.1% the previous month. This is the sixth consecutive month of slowing inflation in the United States, after the peak in June, at 9.1%.

The decline in inflation “should convince the Fed (US central bank) to slow the pace of its rate hikes at its next meeting” on January 31 and February 1, estimated Jeffrey Roach of LPL Financial, which tables, like almost all investors on a rise of only a quarter of a point.

“Our base case is that the economy will slow enough that the Fed is considering lowering rates in the second half,” he added.

The reaction of the bond market reflects the vision of operators, who believe in a more moderate monetary policy from the Fed in the months to come.

The yield on 10-year US government bonds eased to 3.43% from 3.53% the previous day.

As for the 2-year rate, which better reflects the expectations of operators in terms of monetary policy, it fell back to 4.10%, for the first time in more than three months.

“It was the bond market that set the course, and the equity markets followed,” explained Angelo Kourkafas, of Edward Jones. Bond prices move in the opposite direction of their rates, which means that they rose significantly on Thursday.

The Nasdaq chained a fifth consecutive positive session on Thursday, brightened by a wave of purchases of technology stocks.

In addition to Microsoft (+1.16%), it was the most volatile securities on the rating that were the most sought after, like the graphics card manufacturer Nvidia (+3.19%), Meta (+2 .87%) or semiconductor specialists Qualcomm (+2.70%) and AMD (+2.52%).

Just like Wednesday, the tide took with it the stocks prized by many stock market investors, in particular the video game brand GameStop (+8.35%) or the network of decoration stores Bed Bath and Beyond (+50.14 %), yet on the verge of bankruptcy.

Even cryptocurrencies were at the party, like bitcoin, which took more than 7%. The cryptocurrency “mining” company Riot Platforms (+14.53%), the Coinbase exchange platform (+8.59%) and Silvergate Capital (+12.89%), parent company of the “bank of crypto” Silvergate Bank, all pranced.

“The risk is that the market gets carried away, that investors take their ease, and that financial conditions ease, which the Fed fears,” warned Angelo Kourkafas.

However, he considers the prospects for additional growth in equities limited, “because the risk of a contraction in corporate results remains”, he recalls, referring to the start of the results season on Friday, which should provide information on the financial health of companies.

On the stock market, American Airlines soared (+9.71% to 16.83 dollars) after the sharp upward revision of its earnings forecasts for the fourth quarter. The Fort Worth, Texas-based company more than doubled the bottom of the range for earnings per share from its previous estimate.

The news benefited the entire airline industry, be it United Airlines (+7.52%), Delta Airlines (+3.72%) or even the unloved Southwest Airlines (+2.78%).

Listed in New York, the Taiwanese semiconductor giant TSMC was propelled (+6.38% to 87 dollars) by record results, with net profit up 78% in the fourth quarter compared to last year .

The group nevertheless warned that the first quarter would be penalized by the decline in demand and a reduction in inventories of customers, less concerned about tensions in the supply chain.

Disney was sought (+ 3.61% to 99.81 dollars), the day after the communication from the board of directors, which said it was opposed to the appointment of investor Nelson Peltz as director.

His investment company, Trian Fund Management, has recently taken a stake and is campaigning for short-term measures, in particular cost reduction.

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