Wall Street is trying to recover after a difficult week, which saw the S&P 500 and the Nasdaq lose respectively 1.11% and 2.41%, reporting the worst week since December. The Dow Jones reported a weekly decline of -0.17%.
In today’s session, at about 3.50 pm Italian time, the Dow Jones, the S&P 500 and the Nasdaq rose respectively by 0.35%, 0.39% and 0.58%.
On the fixed-income market, 10-year Treasury rates fell to 3.715%, while two-year US government bond rates rose to 4.547%.
In Friday’s session Wall Street closed positive.
The S&P 500 finished the session up 0.2%, a
4,090.46; the Nasdaq Composite fell 0.61% to 11,718.12. the Dow Jones Industrial Average rose 169.39 points (+0.5%) to 33,869.27.
The negative weekly trend of the US stock market is explained by the statements of Fed chairman Jerome Powell who, in a speech given to the Economic Club of Washington, underlined that the Federal Reserve still has a long way to go in its battle against inflation .
Powell also said that interest rates could rise more than markets anticipated if the pace of inflation growth does not die down sufficiently.
“The market is starting to understand that the disinflation story is more complex than we would like it to be,” said the former CEO of Pimco, head of Allianz’s economic advisory division Mohamed El-Erian, in a speech at the CNBC TV show “Squawk Box”.
“Now we can say, I believe for the first time, that the disinflationary process has begun”. These were the words of Jerome Powell, chairman of the Federal Reserve, uttered in the press conference following the announcement on US rates on February 1st – when the cost of money had been raised by 25 basis points to the new range between 4 .5% and 4.75%, records since October 2007 – to rekindle the hope of investors and traders that the US central bank was close to ending its battle against inflation.
An illusion, which was unmasked by Powell himself last week, with the following clarification:
“The disinflationary process, or the process of inflation going down, has begun, and it has begun in the goods sector, which represents about a quarter of our economy. But there is still a long way to go. We are only in the initial phase,” said the Fed head.
Powell added that “the truth is, we will continue to react to the data. Therefore, if we continue to see data that, for example, confirm a stronger labor market and higher inflation, we could find ourselves in the situation of having to raise rates more than the markets price”.
Crucial market mover this week will be the publication of US inflation data measured by the CPI consumer price index, expected to rise by 0.4% on a monthly basis (by economists interviewed by Dow Jones) and by 6.2% every year. The data will be announced tomorrow, Tuesday 14 February.
From the latest available numbers on US inflation, it emerged that, in December, the US consumer price index slowed further, rising by 6.5% on an annual basis, compared to +7.1 % of the previous month.
The figure was roughly in line with expectations, as analysts polled by Bloomberg had forecast a headline CPI consumer price index up 6.6% year-on-year.
Month-on-month, US inflation fell 0.1% month-on-month, more than expected unchanged trend.
In the meantime, the US quarterly season is drawing to a close. This week, it’s the turn of giants like Coca-Cola, Marriott, Cisco. So far, several companies have reported worse-than-expected quarterly earnings to the point that a Credit Suisse study has highlighted that the earnings season (referring to the fourth quarter of 2022 financial results) is about to end. more than 20 years.