Shares rose in Wednesday trading on Wall Streetas investors prepare for an update on the inflation highly anticipated and several big corporate earnings reports later in the week.
Shortly before the close, the index S&P 500 rose 1.2%, the Industrial Average Dow Jones 0.7% and the nasdaq 1.7 percent. All the big indices are on track to register weekly earnings in what has been a strong start to the year after a dismal 2022.
Bond yields were mixed. The yield on the 10-year Treasury note, which influences mortgage rates, fell to 3.56% from 3.61% on Tuesday.
The negotiation has been quiet and uncertain over week. Inflation and the Federal Reserve’s fight against it continue to be the main focus of investors’ attention. Wall Street hopes cooling inflation and a slowing economy will convince the central bank to cut its aggressive interest rate hikes, which have weighed on asset prices and risk triggering a recession.
“I think what’s really supporting the market is just the fact that the market doesn’t believe the Federal Reserve when it says it’s going to keep raising rates this year,” said Brad McMillan, chief investment officer at Commonwealth Financial Network.
Investors expect inflation to continue cooling throughout the yearthus meeting the goals of the Federal Reserve without having to continue to apply the brakes on the economy with high interest rates.
Many of the stocks that fell the most in the past year have gone recovering land this year. Facebook parent Meta is up almost 11% so far in 2023, after plunging 64% in 2022.
The next big event for the markets is Thursday’s update from the government on the inflation to the consumer for December. Economists expect the December report to show that US inflation has slowed further, to 6.5% from the 7.1% November and from a maximum of more than 9% in summer.
The Booking Federal it has pledged to keep interest rates rising until it is certain that inflation is subsiding. Its reference interest rate is between 4.25% and 4.5%, compared to a level close to zero at the beginning of last year.
Worse-than-expected inflation data could dash Wall Street’s hopes that the Federal Reserve will halt its hikes soon and even cut rates by the end of the year. Some investors see the economy successfully walking the tightrope of slowing enough to end high inflation, but not so much as to cause a painful recession.
Wall Street is already getting more information about how companies are handling the persistent inflationary pressure on consumers: Retailers warn that weaker demand is hurting revenue and tech companies are laying off workers. Earnings season will intensify on Friday, when several large companies present their results.
Bank of America, Delta Air Lines, JPMorgan Chase and UnitedHealth will present their results on Friday.
Asian markets were mixed overnight and European ones were higher.
(With information from AP)
The inflation rate in the United States fell more than expected in November and reached 7.1 percent year-on-year
Inflation in the US: the Federal Reserve raised the reference rate to the highest level since 2007