Financial institutions on Wall Street are waging an intense offensive.
Amidst speculations of interest rate cuts, the US stock market's outlook grew hazy following the release of January's inflation data. The data showed a surprising increase in consumer prices, dampening investors' spirits. Initially, the major indices struggled, but by the end of trading, they managed to push aside the gloomy clouds.
The tech-heavy Nasdaq experienced the most significant recovery since November 21, 2024, following an initial shock. The Dow Jones Index dipped 0.5%, the S&P-500 fell 0.3%, and the Nasdaq Composite remained flat. The NYSE saw 791 gainers, 2022 losers, and 40 unchanged stocks.
Though inflation spiked, analysts noted that medium-term inflation expectations remained unaffected. Investors' hesitancy stemmed from signs of stubbornly high inflation due to US government tariffs. Waning rate cut hopes and rising yields initially boosted the dollar, but it later gave up its gains.
The market had to digest some earnings reports from major US companies, with Kraft Heinz and Super Micro Computer leading the pack. Kraft Heinz fell after mixed quarterly results, while Super Micro Computer rose due to an optimistic outlook. Zillow, Lyft, and others disappointed with their weak outlooks, but Upstart surged with an optimistic projection.
As for oil prices, they weakened due to increased US crude oil inventories and Trump's announcement of potential Russian oil talks. The market also digested news from CVS Health, Gilead Sciences, Edwards Lifesciences, and Chevron.
The enrichment data revealed that the Consumer Price Index (CPI) rose 0.5% in January, exceeding the expected 0.3% increase, and the annual inflation rate surged to 3%. Core CPI also rose more than expected, causing concerns about inflation. Stocks like Home Depot, Salesforce, Amazon, and others showed significant losses, while UnitedHealth, Walmart, JPMorgan Chase, and Apple traded positively. The market now predicts that the Fed will hold rates steady until the second half of 2025.
Despite the unexpected increase in inflation, impacting various stocks negatively, the overall sentiment towards the economy remains relatively stable. The market anticipates the Federal Reserve to maintain interest rates until the second half of 2025, indicating a belief in the economy's resilience.
