Slightly lower-than-expected inflation figures sent the US stock market sharply higher on Friday – especially in the riskier parts of the stock market. For a long time, the market seemed to be going higher on Monday, but turned around towards the end of the trading day and ended lower after Fed members’ comments.
The leading stock market indices opened significantly higher on Tuesday, but retreated again somewhat during the trading day. At 20.15 Norwegian time it looked like this:
- The S&P 500 Collective Index, made up of the 500 largest companies listed in the United States, rose 0.88 percent.
- The Nasdaq Composite Index, dominated by technology companies, rose 1.45 percent
- The Dow Jones Industrial Average, which consists of 30 handpicked stocks believed to be important, rose 0.17 percent.
Bloomberg links market turmoil to On Tuesday, Russian missiles fell in the village of Przyudow in Poland, a NATO country, near the border with Ukraine.According to an American intelligence source. It was said that two people were killed.
Better than expected
After Friday’s aggressive market rally, Fed member Christopher Waller warned over the weekend that the CPI is just one data point and that the Fed needs more evidence that inflation is slowing.
On Tuesday at 2.30pm, a figure was released that could point to the trend: US producer prices rose 0.2 per cent from September to October, but a 0.4 per cent gain had previously been expected. The annual growth was 8 percent, compared with 8.4 percent in September. Producer price index numbers are set to be a leading indicator of consumer price numbers.
On Tuesday, Fed member Patrick Harker said he envisions smaller interest rate increases in the future, but that the Fed will likely have to tighten monetary policy over time, according to Bloomberg.
Harker also addressed the Fed’s balance sheet, which has doubled during the pandemic to $9 trillion by buying fixed-income securities. The Fed began slashing its balance sheet earlier this year and has cut it so far by $300 billion. Harker says, according to Bloomberg, that the Fed will likely cut the balance sheet by $2,500 billion in total, but that it will depend on economic data.
Central Bank Deputy Governor Lyle Brainard spoke on Monday at an event organized by Bloomberg. There, she said, it is soon time to slow down sharp rate increases, but at the same time added that the Fed “still has a job to do.” The market is currently pricing in an 80 percent chance that the Fed will raise interest rates by 0.5 percentage point in December, while there is a 20 percent chance of a 0.75 percentage point increase, according to CME Group.
Members of the US Federal Reserve speak regularly to the press and at conferences about their views on the economy and monetary policy. This falls under the important monetary policy tool “Forward Guidance”, in which signals are given about what the central bank intends to do in the future. In this way, Fed members can talk the market interest rates down or up.
Before the stock market opened, retail giant Wal-Mart provided numbers for the third quarter, with turnover and a better-than-expected result. The company’s sales amounted to 153 billion dollars, compared to an expected 148 billion. Earnings per share closed at $1.5 vs. $1.32 expected.
Wal-Mart is also raising its guidance for the year as a whole. The company meanwhile launched a $20 billion share buyback program.
Wal-Mart shares rose nearly 7 percent on Tuesday. The company’s market capitalization is now approximately NOK 4,000 billion.
Customers are now putting their capital goods purchases on hold and stocking up on lower-priced products, John David Rennie, Walmart’s chief financial officer, told CNCB, and here-at-home retailers also reported throughout the summer and fall. (Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We’d like you to share our statuses using links that lead directly to our pages. Reproduction or other use of all or part of the Content may be made only with written permission or as permitted by law. For additional terms look here.
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