(New York) The New York Stock Exchange, little affected by slightly higher than expected American inflation, closed sharply higher on Tuesday driven by good results in technology which led the S&P 500 to a new record.
The Dow Jones index gained 0.61% to 39,005.49 points, the technology-heavy NASDAQ jumped 1.54% to 16,265.64 points and the broader S&P 500 index rose to a new closing high, climbing 1.12% to 5175.27 points.
The increase in consumer prices in the United States regained some strength year-on-year in February at 3.2% compared to 3.1% and to 0.4% over the month compared to +0.3% in January, particularly because of energy prices, according to the CPI index.
While this renewed inflation has caused bond yields to rise, it has not dampened investors’ enthusiasm for stocks.
The rate on ten-year Treasury bills stood at 4.15% at Wall Street’s close compared to 4.09% the day before. That at two years rose to 4.59% against 4.53%.
Initially shaken by the tenacity of inflation, the stock market indices finally took off again, driven in particular by the good results of Oracle which had an impact on the mega-caps, the locomotives of technology.
The IT services giant, whose stock ended up 11.71% at $127.50, posted better-than-expected third-quarter profit.
Oracle management indicated that demand was very strong to develop infrastructures dedicated to generative artificial intelligence (AI) in companies.
The designer of chips for AI, Nvidia, whose stock had fallen significantly from its historic peak on Friday, recovered, up 7.16% to $919.13.
Among tech mega-caps, Meta gained 3.34%, Amazon +1.99% and Microsoft gained 2.66%.
“After Oracle’s strong results, investors are looking beyond inflation to corporate results. It’s a big change,” assured Adam Sarhan of 50 Park Investments.
Inflation, if it is now plateauing, “is still a concern but is no longer a threat and the market can breathe a collective sigh of relief,” said the analyst.
Now the market expects a drop in overnight rates in June or even July, according to CME Group’s calculations on futures contracts.
The Fed is holding a monetary meeting next week, on March 19 and 20, and any monetary easing seems ruled out.
“The Fed Monetary Committee (FOMC) has more arguments to leave rates unchanged”, while they are at their highest level in more than 20 years, in the range of 5.25% to 5.50 %, noted Chris Low, economist for FHN Financial.
“A rate cut in March was already completely ruled out but today’s CPI data will reinforce expectations for a first cut not before June, at the earliest,” he added.
Elsewhere, Southwest Airlines fell 14.88% as it reassessed its 2024 projections in light of delayed Boeing aircraft deliveries.
The company says it should receive more than half of its 737 MAX orders this year, or 46 aircraft. Southwest is expected to post a loss in the first quarter but return to profitability in the second.
Boeing for its part lost 4.29%.
The video game platform Roblox lost most of what it had gained the day before (-2.97%).
Several stocks in the solar energy sector melted, such as SunPower Corporation (-6.78%), which worried investors by postponing the disclosure of its annual results. Sunrun lost almost 11% and SolarEdge Technologies lost 3.15%.