Wall Street on the rise, the Fed’s unpleasant surprise digested

(New York) The New York Stock Exchange opened higher on Thursday, the market appearing to have already digested the unpleasant surprise of the day before, which saw the president of the American central bank (Fed) rule out the hypothesis of a first decline rate in March.




Around 10:05 a.m. ET, the Dow Jones gained 0.17%, the NASDAQ index rose 0.76% and the broader S&P 500 index gained 0.45%.

On Wednesday, the NASDAQ dropped 2.23% and the S&P 500, 1.61%, at the end of a difficult session, marked by results considered mixed from Microsoft, Alphabet and AMD, the day before, a figure of creations of disappointing jobs and, finally, a firmer message than expected from the Fed.

Federal Reserve Chairman Jerome Powell said it was unlikely that at the Fed’s next meeting in March, central bankers would have enough “confidence” in the trajectory of the economy and inflation to lower rates. rate.

“The stock market seems ready for a rebound,” Patrick O’Hare of Briefing.com commented in a note.

“Investors get worried and sell immediately after the (communication from the) Fed, and then they come to their senses and a week or two later, stocks are up,” explains Adam Sarhan of 50 Park Investments.

After experiencing ups and downs on Wednesday, the bond market stabilized.

The yield on 2-year government bonds, considered to reflect expectations in terms of monetary policy, stood at 4.22%, compared to 4.20% the day before.

“The market knows that rate cuts are only a matter of time,” according to Adam Sarhan. “There was a negative reaction yesterday, but today we are saying that even if the Fed does not lower its rate in March, it will do so later this year. »

Today’s macroeconomic news further supported the scenario of a soft landing for the economy.

New weekly jobless claims were higher than predicted by economists.

Furthermore, labor costs only increased at an annualized rate of 0.5% in the fourth quarter, less than the 1.6% expected, a positive element in the fight against high inflation.

On the market, Amazon (+2.28%), Apple (+0.79%) and Meta were all clearly in the green (+2.30%), to start a day which will be punctuated by the publication of their accounts quarterly, after the closing.

The industrial group Honeywell was penalized (-4.38%) for a turnover lower than expectations, penalized in particular by the stagnation of its infrastructure services activity.

The Merck laboratory (+1.97%) did better than expected in the fourth quarter, despite a significant loss of $1.2 billion. Its forecasts for the current fiscal year are also above analysts’ projections.

The cruise line Royal Caribbean lost ground (-1.18%), although it did better than expected in the fourth quarter. The group said it was “very optimistic for demand and the pricing environment in 2024”.

The specialist in treadmills and connected bicycles Peloton stalled (-18.35%) after reporting a new loss in the fourth quarter and publishing forecasts considered very disappointing.

Qualcomm fell (-4.67%) despite more solid results than expected, the group having benefited from the start of a rebound in the smartphone market, the core target of its electronic chips. The company nevertheless announced a lower-than-expected profit target for the current quarter.

The regional banking sector was once again causing concern, almost a year after the start of the crisis which had brought several establishments to the ground.

New York Community Bancorp dropped 9.97%, after having already fallen by 38% the day before, following the publication of a quarterly net loss, Tuesday after market trading.

The takeover, in March 2023, of its competitor Signature Bank, which came under the control of the American authorities to avoid bankruptcy, pushed NYCB into the group of banks with more than $100 billion in assets, which leads to obligations reinforced prudential measures.


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