Slightly lower-than-expected inflation data led to a sharp rally in the US stock market on Friday, particularly in the riskier parts of the stock market. For a long time, the market looked to be bullish on Monday, but towards the end of the trading day it turned around and finished lower following statements from US central bank (Fed) members.
The major stock market indexes opened sharply higher on Tuesday, but fell slightly again during the trading day. At 20.15 Norwegian time it looked like this:
- The S&P 500 collective index, which comprises 500 of the largest publicly traded companies in the United States, climbs 0.88%
- The Nasdaq Composite, dominated by technology companies, rose 1.45%.
- The Dow Jones Industrial Average, which consists of 30 hand-picked stocks deemed important, rose 0.17%
Bloomberg links the turmoil in the market to that Russian rockets landed on Tuesday in the village of Przewodów in NATO-country Poland near the border with Ukraine, according to a US intelligence source. Two people are said to have been killed.
Better than expected
After the market’s sharp rally on Friday, Fed member Christopher Waller warned over the weekend that the CPI is just a figure and that the Fed needs more evidence that inflation is slowing.
A number came out at 14:30 Tuesday that may point in that direction: US producer prices (PPI) rose 0.2 percent from September to October, but were previously expected to rise by 0, 4 percent. Annual growth was 8%, compared to 8.4% in September. The PPI figures are set to be a leading indicator for consumer price figures.
Fed member Patrick Harker said on Tuesday that he expects smaller interest rate hikes in the future, but that the Fed will likely need to tighten monetary policy over time, according to Bloomberg.
Harker also addressed the Fed’s balance sheet, which has more than doubled to $9 trillion during the pandemic by buying fixed-income securities. The Fed began shrinking its balance sheet earlier this year and has reduced it by $300 billion so far. Harker says, according to Bloomberg, that the Fed will likely cut the balance sheet by $2.5 trillion in total, but that will depend on economic data.
Deputy central bank governor Lael Brainard spoke at an event hosted by Bloomberg on Monday. There he said that the time would soon come to slow the steep interest rate hikes, but he added at the same time that the Fed “still has a job to do.” The market is currently pricing in an 80% chance the Fed will raise interest rates by 0.5 percentage point in December, while there’s a 20% chance of a 0.75 percentage point hike, according to CME Group .
Members of the US Federal Reserve regularly speak to the press and at conferences about their views on the economy and monetary policy. This is part of the important monetary policy tool “forward guidance”, in which signals are given about what the central bank intends to do in the future. In this way, Fed members can lower or raise market interest rates.
Walmart
Before the opening of the stock market, the retail giant Walmart presented the data for the third quarter, where both the turnover and the result were better than expected. The company reported revenue of $153 billion versus $148 billion expected. Earnings per share closed at $1.5, versus the expected $1.32.
Walmart is also raising its guidance for the full year. At the same time, the company launched a $20 billion share buyback program.
Walmart shares rose about seven percent on Tuesday. The company now has a market value of nearly NOK 4 trillion.
Walmart Chief Financial Officer John David Rainey tells CNCB that customers are now pausing capital equipment purchases and instead stockpiling lower-priced products, as retailers here at home have also reported over the summer and fall. (Terms)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using the links, which lead directly to our pages. Copying or other forms of use of all or part of the content may only take place with written permission or as permitted by law. For additional terms see her.
