The US indices start above parity, with the Dow Jones +0.2%, the S&P500 +0.4% and the Nasdaq up 0.8%.
Among individual stocks, Moderna advanced 7.8% after it said its vaccine against respiratory syncytial virus (RSV) infections met targets, proving highly effective in preventing lung disease in older patients. IBM, on the other hand, lost ground (-1.2%) after Morgan Stanley cut its recommendation on the title from overweight to equalweight.
Investors continue to evaluate the indications coming from quarterly and macro data to gain indications on the possible future trajectory of monetary policy, in particular if there are any chances of rate cuts as early as this year.
Meanwhile, St. Louis Fed Chairman James Bullard said the cost of borrowing will need to rise further to ensure inflationary pressures ease. “We’re almost in what we could call a tight zone, but we’re not quite there yet,” Bullard said.
The macroeconomic agenda revealed a slowdown in producer prices, which grew in December by 6.2% annually against the +6.8% expected and the +7.3% in November. Excluding the energy and food price components, the index rose at a rate of 5.5% on an annual basis, compared to the +5.7% expected, confirming an easing of inflationary pressures.
Meanwhile, retail sales fell more-than-expected (-1.1% in December versus -0.9% estimated), fueling fears aggressive interest rate hikes could plunge the economy into recession .
The dollar fell against all major currencies except the yen (USD/JPY at 128.2), after the Bank of Japan confirmed its accommodative monetary policy. Bond yields fell sharply across the entire curve, with the 10-year bond down by 16 bp to 3.39%, in the wake of expectations of an imminent conclusion of the Fed’s restrictive cycle.