Friday ended with a large rally in the three major Wall Street indices, all of which rose significantly over the previous week. The Dow Jones Industrial Index in particular had a good October, the best month since 1976.
But on Monday there was a bad mood on the American stock exchanges:
- The broad S&P 500 fell 0.74%.
- The Dow Jones 30 industrial index fell 0.39%.
- The tech-oriented Nasdaq Composite closed 1.03% lower.
The highlight of the week is the US central bank (Fed) interest rate decision, which will be presented Wednesday evening, Norwegian time. The Fed is expected to once again raise the benchmark interest rate by 0.75 percentage points.
Biden wants the highest energy tax
President Joe Biden and the Democrats have grown tired of high energy prices in particular and are particularly keen to reduce the price at the gas pump now, just before the mid-term elections to Congress. Biden has repeatedly attacked oil and energy companies on charges of drastically raising prices with false excuses which is due to the war in Ukraine and other geopolitical unrest.
On Monday, Biden will deliver a speech in which he is expected to work out a new line of attack against the oil companies. This time the president will according to The Washington Post newspaper, it is more than a condemnation and a verbal expression, namely a proposal for a new maximum tax for energy companies that are now earning better than ever. Last week, for example, giant Exxon Mobil recorded its best third quarter ever, with a result of well over NOK 200 billion.
High gasoline prices affect all consumers and push inflation up, and gasoline prices are also politically inflamed and can help overturn the midterm elections so that Democrats lose the narrow majority that the party has in the House of Representatives and the Senate.
Still high price growth
On Friday, new inflation data came from the US, which showed continued high price growth. The PCE, or “personal consumption spending,” is the US central bank’s preferred measure of price growth.
Contrary to the consumer price index (CPI), the weighting of goods and services in the PCE is adjusted to take into account changes in people’s spending habits. The PCE deflator is the quantity that the US central bank uses as the basis for its inflation calculations.
Upfront, according to Bloomberg, an annual price growth, according to the PCE measurement, of 6.3% was expected. The percentage was 6.2 percent, which is lower than expected. In August, the increase in prices was 6.2 percent.
Euro zone inflation data on Monday showed the highest price hike ever. Consumer prices in the eurozone rose 10.7% yoy in October, while previously 10.3% growth was forecast. Core inflation was 5.0%.
Equity markets recovered in October
After a particularly weak September, equity markets rallied strongly in October. The broad S&P 500 index is set to rise about 8% in October, while the Dow Jones, a heavy sector, is set to rise more than 13%. The Nasdaq tech index is also set to rise in October, but with a slightly more cautious five percent.
Last week, many of Wall Street’s major tech companies presented quarterly data. Facebook owner Meta was among the companies they disappointed and were then severely punished on the stock exchange. Meta’s share fell 25% in one day last week and continues its decline this week, down more than 5% on Monday afternoon.
– What disappoints the market is that costs are rising, especially for Amazon, Alphabet and Meta. This negatively affects operating margins, which results in lower profitability. Microsoft’s cost discipline has been slightly better, but the weaker outlook for the future disappoints, causing the stock to be penalized, he said. Robin Øvrebø, manager of Odin’s US fund, at DN last week. (Terms)Copyright Dagens Næringsliv AS and / or our suppliers. We would like you to share our cases via 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 prior written permission or as permitted by law. For additional terms look at her.
