Wall Street in disarray, awaits inflation data and results
by Chuck Mikolajczak
The New York Stock Exchange ended mixed on Tuesday, with the S&P-500 posting slight gains while the Nasdaq fell, amid cautious investor sentiment ahead of the consumer price report as well as of the quarterly results season.
The Dow Jones index gained 0.52%, or 221.16 points, to 42,518.28 points.
The broader S&P-500 gained 6.69 points, or 0.11%, to 5,842.91 points.
The Nasdaq Composite fell 43.71 points (0.23%) to 19,044.39 points.
The main Wall Street indexes experienced a seesaw session, alternating gains and losses, following a report from the US Department of Labor showing that producer prices grew less than expected in December.
However, this data did not influence market expectations about the Federal Reserve’s (Fed) monetary policy this year.
The US central bank is expected to slow the pace of its rate cuts, a prospect that the report on consumer prices in the United States, due Wednesday, could confirm or attenuate.
In this context, the gains recorded in the morning on Wall Street partly evaporated throughout the session.
Noting a “relieving bounce” that initially occurred on Tuesday, Chris Fasciano, chief strategist at Commonwealth Financial Network, noted the “level of uncertainty about the path of rates and the Fed.”
“We will see what happens (Wednesday) morning,” he added, referring to the consumer price index. According to LSEG data, markets anticipate that the Fed will cut interest rates by around 29 basis points by the end of the year, with a decision to do so expected in June.
Concern that the vast customs duties promised by US President-elect Donald Trump, who will return to the White House next Monday, would encourage a rise in inflation weighed on the markets.
The S&P-500 ended lower in four of the past five weeks, amid continued strength in the US economy and comments from Fed officials that the institution could be less aggressive than initially expected in its fight against inflation.
Kansas City Fed President Jeff Schmid said the impact of Donald Trump’s policies was the subject of an “active conversation” at the U.S. central bank, which he added , is ready to respond if inflation or employment deviate from desired trajectories.
Fueling investor caution, bond yields remained high on Tuesday, with ten-year US Treasury bonds remaining close, at 4.784%, to the nearly fourteen-month peak reached the day before.
On the sidelines of consumer prices, Wednesday marks the launch of the quarterly results season, with several large American banks.
The banking sector ended the day’s session on the rise, driven in particular by the 1.52% increase in Goldman Sachs which also contributed to the holding of the Dow Jones.
Conversely, health ended in the red, notably under the effect of the 6.59% drop in Eli Lilly after disappointing quarterly sales forecasts for its drug promoting weight loss (Zepbound). Boeing fell 2.08% after reporting the lowest annual number of deliveries since the COVID pandemic.
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(Written by Jean Terzian)
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