January 30, 2023

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Wall Street ended significantly lower after rallying earlier in the day

Wall Street ended significantly lower after rallying earlier in the day

The top three stock market indexes in the US ended the day down nearly 1%. Thus, the week ended down more than 3 percent in total.

– Last week’s rally was overdone, and I think we’ve basically used this week to bring it back pretty much, says Steve Sosnick to the Marketwatch website. Sosnick is Chief Strategist at Interactive Brokers.

– The market realizes that it overreacted last week to comments from Central Bank Chairman Jerome Powell, where he suggested that the Federal Reserve (the US central bank) may adjust interest rate increases at its interest rate meeting later this month, says Sosnick.

The day’s most heavily traded stock was Tesla, which ended up 3.1 percent higher. Apple, Nvidia and Amazon.com shares, which were also heavily traded, fell 0.2-1.7 percent.

Among the highly traded stocks that stood out was Lululemon Athletica, which produces and sells, among other things, yoga apparel. The company fell 12.9 percent after the announced figure for the third quarter.

Stronger than expected

This week, investors received a number of reports showing that the US economy is stronger than expected. On Friday, the Producer Price Index (PPI) report was released, which showed an increase of 0.3 percent in November.

Early on, producer prices were expected to rise 0.2 percent on a monthly basis, according to Trading Economics. This led to a poor start to the trading day, with major indices down 0.3-0.7 percent.

The mood shifted after a relatively short time, and at 18:00 NST the indices were up 0.2-0.5 percent. Since then, things have gone back-and-forth, and the biggest pointers ended up as follows:

  • The S&P 500 index fell by 0.7 percent
  • The Dow Jones index fell 0.9 percent.
  • The Nasdaq Composite Index fell 0.7 percent
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Recession fear affected investors this week. The possibility that the US central bank may have to increase its key interest rate and keep it higher for a longer period, due to surprisingly strong numbers from the US economy, is putting a damper on the market.

The first three trading days were slow, and they all ended in decline. However, Wall Street turned around on Thursday after slightly more new applicants for unemployment benefits were reported. That should be the first sign of calming down.

It ended Thursday broadly higher in all three major indexes, with the Nasdaq advancing 1.1 percent.

Next week, investors are waiting for the Consumer Price Index for November, which is scheduled for Monday. It will give economists and investors more clarity about the direction of inflation in the United States.

Waiting for the new interest rate increase

There is less than a week left until Central Bank Governor Jerome Powell and the Federal Reserve make their final interest rate announcement of the year on December 14th.

Then the central bank is expected to cut the rate a bit, after four consecutive increases of 0.75 percentage points, and there you are The latest increase came at the beginning of November. Indeed, Powell stated last week that the time for “rate-setting moderation” may be imminent.

On Thursday of last week, figures for personal consumption expenditures, the Fed’s preferred measure of inflation, showed just that US inflation in October was 6 per cent. But the day before the Fed’s next interest rate decision, another US inflation number will be released.

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Prior to the Fed’s latest interest rate announcement, the key rate ranged between 3.75 and 4 percent(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.