In the US stock market on the 9th, the S&P 500 stock index rose for the fourth day in a row and exceeded the 5,000 mark for the first time at closing price. Expectations for interest rate cuts and solid corporate performance are pushing up stock prices.
Stock closing price change rate from previous business day S&P 500 stock index 5026.6128.700.57% Dow Jones Industrial Average 38671.69-54.64-0.14% Nasdaq Composite Index 15990.66196.951.25%
Buoyed by optimism about a soft economic landing and euphoria surrounding artificial intelligence (AI), the stock market has shrugged off caution over overheating and continued to move forward.
“The S&P 500 is the best barometer of confidence in the profitability of U.S. companies and the strength of the U.S. economy,” said George Ball, chairman of the investment firm Sanders Morris. “The direction of the S&P 500 reflects whether the economy and earnings are improving or worsening,” he said.
With the January U.S. Consumer Price Index (CPI) to be watched next week, the annual revision of the CPI announced by the Bureau of Labor Statistics (BLS) this morning includes food prices for the October-December 2023 (fourth quarter) period. The core index excluding energy and the composite index remained almost unchanged, reassuring investors who had been nervous about the possibility of a significant upward revision.
Annual revision of US CPI, almost unchanged from October to December 2023 – a source of reassurance for the Fed
David Donabedian, chief investment officer at CIBC Private Wealth US, said the current economic climate is supporting Wall Street bulls. “The market believed that the US Federal Reserve would be the savior, but now that the economy has been supported, they have decided that they don’t need a savior,” he said.
“Some people say it’s just one of many numbers that we digest every day,” said Kenny Porcari, senior market strategist at Slate Stone Wealth, regarding the S&P 500’s rise above the 5,000 mark. There may be some, but this number is different.” He said, “The 5000 represents a new millennium and creates more excitement. This excitement will continue for some time yet.”
Two-thirds of the earnings season is over, but so far many companies have exceeded expectations. According to data compiled by Bloomberg Intelligence as of the morning of the 9th, about 80% of S&P 500 companies exceeded market expectations for the fourth quarter of 2023. This is significantly higher than the average of 74% over the past 10 years.
“Fourth quarter results were stronger than expected, giving investors confidence that a healthy economy will continue to drive corporate earnings,” said Arthur Hogan, chief market strategist at B.Reilly Wealth.
Earnings Growing at Fastest Clip Since 2022
Source: Bloomberg Intelligence
On the other hand, there is also a sense of caution about the overheating of the US stock market. Michael Hartnett of Bank of America (BofA) said the rapid rise in U.S. stocks to record highs is about to trigger some sell signals. According to a report he compiled, the bullish/bearish signal calculated by BofA rose to 6.8 in the week ending on the 7th. A break above 8 would indicate an overreach of the bullish trend and trigger a contrarian sell signal.
US stocks soar, near triggering sell signal – BofA’s Hartnett
Brett Kenwell, options investment analyst at eToro, said the market is a bit overheated, but he doesn’t think it’s about to go off the rails. “There may be some profit-taking in the short term, but this is still a bull market. It’s hard to be bearish on stocks until we see significant weakness in the economy,” he said.
national debt
US bond prices are falling (yields are rising). There were times when the CPI rose immediately after the annual revision was announced, but it quickly reversed. Two-year bond yields have returned to levels seen in December of last year.
Japanese government bond price change from previous business day (bp) US 30-year bond yield 4.37% 2.00.46% US 10-year bond yield 4.17% 1.90.47% US 2-year bond yield 4.48% 2.60.58% 16:00 ET 45 minutes
Atlanta Fed President Bostic said today that policymakers must ensure inflation falls to its 2% target, emphasizing the need to “stay on course.”
Dallas Fed President Logan said he sees no urgency to cut interest rates at this point, adding that Fed officials have time to review future economic data.
foreign exchange
In the foreign exchange market, the dollar weakened. This was in response to the downward revision of the inflation rate in December last year in the annual revision of the CPI. Among the 10 major currencies, the New Zealand dollar has seen a notable rise. Market expectations are growing that the Reserve Bank of New Zealand (central bank) will raise interest rates further.
The Bloomberg Dollar Spot Index, which measures the dollar’s movements against 10 major currencies, rose for the sixth straight week on a weekly basis. This is the longest consecutive high since September last year.
Exchange Rate Last Business Day Change Rate Bloomberg Dollar Index 1242.13-0.92-0.07% USD/JPY ¥149.28-¥0.04-0.03% EUR/USD $1.0786$0.00080.07% 16:45 ET
On that day, the yen exchange rate briefly rose immediately after the announcement of the annual revision of the CPI, but since then it has stabilized at around 149 yen to the dollar.
Deutsche Bank said in a note to clients on Tuesday that the yen is unlikely to “return to strength in a meaningful way” unless the U.S. falls into recession. The reasons for this were the large scale of capital outflows into foreign bonds and stocks, and the Bank of Japan’s “incrementalist” approach to raising interest rates.
The yen is unlikely to appreciate significantly due to capital outflows and gradual interest rate hikes – Deutsche Bank
However, Eric Nelson, a macro strategist at Wells Fargo, said, “We will need another two weeks of very strong U.S. economic data for the dollar to sustainably move above 150 yen.” Stated.
crude
New York crude oil prices rose for the fifth day in a row. The geopolitical risk premium for oil has risen as hopes for a ceasefire between Israel and the Islamic group Hamas fade and Israel prepares for a military invasion of the southern Gaza Strip.
West Texas Intermediate (WTI) closed at around $76 a barrel. Israeli Prime Minister Benjamin Netanyahu has ruled out a ceasefire and threatened a military invasion of the southern Gaza Strip, where more than 1 million people have fled. The military escalation has posed new risks to oil flows in the region, which accounts for about a third of the world’s oil output.
“Oil prices remain quite sensitive to developments in the Middle East, and everything else appears to be less important,” Fawad Razaqzada, market analyst at City Index, wrote in a note. He noted that futures prices continue to be volatile.
March WTI futures on the New York Mercantile Exchange (NYMEX) rose 62 cents, or 0.8%, to end at $76.84 per barrel. It rose 6.3% for the week. North Sea Brent for April contract rose 56 cents to $82.19.
Money
Gold prices continue to fall. It dropped even for a week. The annual CPI revision remains largely unchanged, and attention is now focused on the future direction of monetary policy.
“Gold will remain static until there is a better understanding of the timing, pace and depth of future US interest rate cuts,” said Ole Hansen, head of product strategy at Saxo Bank. The short-term direction “will continue to depend on future economic data and its impact on the dollar, yields and, in particular, expectations for rate cuts.”
As of 1:41 pm New York time, the spot gold price was $2,023.20 per ounce, down $11.32 (0.6%) from the previous day. New York Mercantile Exchange (COMEX) gold futures for April contract fell $9.20, or 0.5%, to $2,038.70.
Original title:Stock Mania Rages On as S&P 500 Closes Above 5,000: Markets Wrap(excerpt)
‘Big Round Number’ for S&P 500 Triggers More Gains: Markets Wrap(excerpt)
Dollar Set for Sixth Weekly Gain on Yield Premium: Inside G-10（抜粋）
Dollar Pares Weekly Gain After US CPI Revisions: Inside G-10（抜粋）
Oil Cements Weekly Gain as Israel Presses Military Offensive(excerpt)
Gold Slips as Traders Mull Fed Rate Path After CPI Revisions（抜粋）
2024-02-09 21:46:00
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