The New York Stock Exchange opened higher on Tuesday, reassured by the slowdown in inflation as well as by signs of calm on the front of the banks, after several days of turbulence.
Around 2:20 p.m. GMT, the Dow Jones gained 1.13%, the Nasdaq index gained 1.81% and the broader S&P 500 index, 1.63%.
The highly anticipated CPI consumer price index came out up 0.4% month on month in February, as projected by economists.
Over one year, US inflation stands at 6%, against 6.4% in January. This is the most moderate pace since September 2021.
Some nevertheless saw some negative elements in this report, in particular the index excluding food and energy (+0.5% over one month), higher than expected by economists (+0.4%), and its equivalent for the only service sector, at its highest, over one year (+7.3%) since 1982.
“These data support the hypothesis of a quarter-point increase at the next meeting”, from the American central bank (Fed), commented, in a note, Rubeela Farooqi, of High Frequency Economists.
“However, the decision will not only depend on the indicators but also on concerns about the stability of the financial system, which could push the Fed not to move next week,” qualified the economist.
The financial markets have just experienced several days of turbulence, linked to the bankruptcy of three banks, including two of the three biggest failures in the history of the United States.
But at the start of the day on Tuesday, several lights turned green again, indicating a change in the mood of investors.
The regional or medium-sized banks which had unscrewed on Monday recovered sharply, in the first place First Republic (+ 47.39%), considered to be the new weak link in the chain in recent days.
The movement also carried the bank of Phoenix (Arizona) Western Alliance (+ 40.89%), the Californian PacWest (+ 48.05%) or the asset manager Charles Schwab (+ 9.25%), all heckled Monday .
“That was the key to the rebound” in the indices, according to Karl Haeling of LBBW. “There were no new developments, but people realized that it was not certain that all these regional banks would implode.”
Another positive element was the jump in bond yields, which had just experienced their worst three-day correction since Black Monday in 1987.
The yield on 10-year US government bonds stood at 3.65%, against 3.57% on Monday at the close.
Clearly more closely followed than the 10-year, because it is more representative of operators’ expectations in terms of monetary policy, the 2-year rate took off at 4.31%, against 3.97% on Monday.
Equity markets often react badly to a tension in bond rates but, in this case, this movement “comforted them, because if yields had continued to plunge, it would have made think of an aggravation of the crisis”, explained Karl Haeling.
“Bonds had risen too much and bank stocks had fallen too far, too quickly,” Patrick O’Hare of Briefing.com summed up in a note. “This observation paved the way for a hunt for bargains.”
Elsewhere on the stock exchange, United Airlines was penalized (-5.53%) after revealing that it expects a loss in the first quarter, which would be the result of a new collective agreement for pilots, even if an agreement has not yet was found with the Air Line Pilots Association union.
Uber (+6.57%) and Lyft (+5.91%) pranced in the wake of Monday’s decision by a California appeals court, which considered that the law on the self-employed status of drivers of VTC (passenger vehicles with drivers) was not against the Constitution of California.
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