(New York) The New York Stock Exchange closed higher on Wednesday, reversing the trend after an initially negative reaction to a mixed inflation indicator, thanks in particular to a hunt for bargains.
The Dow Jones gained 0.31%, the NASDAQ 2.17% and the broader S&P 500 index gained 1.07%.
The New York market had nevertheless gotten off on the wrong foot, caught off guard by a contrasting report on inflation.
It showed that consumer prices rose only 2.5% year-on-year in August in the United States, according to the CPI index, less than the 2.6% forecast by economists and below the 2.9% in July.
But the publication also highlighted an acceleration in the core index, excluding food and energy, to 0.3% over one month against 0.2% anticipated, largely due to housing and transport spending.
“These data are encouraging overall, but they call for caution regarding the price trajectory,” said Interactive Brokers analyst José Torres in a note.
For Lydia Boussour, EY analyst, “the August CPI reinforced the thesis of a quarter-point rate cut […] rather than half a point” by the American central bank (Fed) at the end of its next meeting, on September 17 and 18.
Operators now only attribute a 15% probability to the hypothesis of a half-point cut, compared to 60% on Friday.
The bond market has acknowledged this recalibration and the yield on 2-year US government bonds has risen to 3.64% compared to 3.60% the previous day at the close.
“There was an overreaction to the CPI,” which faded “after reflection,” said Art Hogan, an analyst at B. Riley Wealth Management.
The market then took “a break after a series of sales, particularly in semiconductors,” he continued.
The champion of chips dedicated to artificial intelligence (AI) Nvidia soared by 8.15%, followed by its competitors AMD (+4.91%) and Broadcom (+6.79%).
Starbucks (+5.21%), the meal delivery platform DoorDash (+3.35%) and the sports equipment manufacturer Lululemon Athletica (+3.24%) also benefited from cheap purchases.
Hogan said Wednesday’s exchanges did not see any significant impact on Tuesday night’s presidential debate, in which Democratic candidate Kamala Harris was widely seen as the best candidate over Republican rival Donald Trump.
The only notable exception was the stock of the former president’s media group, Trump Media and Technology Group (TMTG), which plunged 10.47%.
The stock is at its lowest since TMTG merged with a listed vehicle on March 26. Since its peak that day, it has fallen by nearly 80%.
Elsewhere in the stock market, the English football club Manchester United, listed in New York, was penalized (-4.57%) for a new annual loss, quadrupled compared to the previous year.
This is the fifth consecutive loss-making year for the Manchester club, which nevertheless recorded record turnover.
Video game retailer GameStop fell 11.98% after reporting a sharp decline in sales and a major new share offering.
Bank of America (-0.71%) suffered from a new sale of a block of shares by Berkshire Hathaway, the holding company of Warren Buffett, a major shareholder of the establishment.
But several rival banks, which were battered on Tuesday, were supported by the hunt for bargains, in particular JPMorgan Chase (+0.81%) and Goldman Sachs (+0.86%).
S&P/TSX index up more than 200 points
Canada’s main stock index reversed course and gained almost 1% on Wednesday, led by gains in the industrials, metals and technology sectors.
The S&P/TSX composite index was down until 12 p.m. U.S. stock markets also rose after a negative start to the day.
The TSX closed up 208.08 points at 23,211.17.
The Canadian dollar was trading at 73.59 US cents compared to 73.53 US cents on Tuesday.
Crude oil rose $1.56 to $67.31 per barrel and natural gas gained four cents to $2.27 per million BTU.
Gold lost 70 US cents to US$2,542.40 an ounce and copper gained four US cents to US$4.14 a pound.
The Canadian Press