(New York) The New York Stock Exchange had difficulty digesting higher-than-expected inflation in the United States on Tuesday, which dampened hopes of imminent rate cuts from the American central bank (Fed).
The Dow Jones index, which had reached a record the day before, suffered its biggest daily decline in a year. It lost 1.35% to 38,272.75 points.
The NASDAQ, dominated by technology, lost 1.80% to 15,655.60 points and the S&P 500 dropped 1.37% to 4953.17 points.
The indices reacted negatively to the publication of higher-than-expected inflation in the United States in January. The consumer price index (CPI) increased by 0.3%, more than in December.
Over one year, the price increase certainly slows to 3.1% but less than expected. Core inflation, excluding energy and food, is stubborn, remaining at 3.9%.
“This data which shows a reacceleration supports the Fed’s opinion that interest rate cuts are not imminent,” commented Rubeela Farooqi, chief economist for HFE.
Bond rates rose sharply upon the announcement of these figures, with the ten-year rate climbing to 4.30% compared to 4.17% the day before, the highest for almost two and a half months. Two-year short rates jumped to 4.64% from 4.47%.
“We are not at all surprised to see bond yields rise after this data” which are “an unpleasant surprise,” admitted Ian Shepherdson of Pantheon Macroeconomics.
According to him, this “does not, however, change the situation”. The analyst expects a continued decline in inflation with a normalization of rents.
Maris Ogg of Tower Bridge Advisors also said the strong CPI figures were “just a blip along the way.”
“I think it’s just a pretty normal back and forth and there’s not the slightest doubt that the Fed is done raising rates,” she added.
While inflation weighs in the debate of the presidential campaign which is beginning, the Biden administration, through the voice of the economic advisor of the White House, Lael Brainard, has criticized the brands for not passing on the price cuts.
On the stock market, Coca-Cola, one of the components of the Dow Jones, was shunned (-0.59%) although having benefited from an increase in its volumes and prices to show more sustained growth than expected by the market in the fourth quarter of 2023.
Revenue reached $10.8 billion, up 7% year-on-year, and was above expectations. The soft drinks giant’s profit nevertheless declined (-3% compared to the same period of 2022), due to unfavorable currency effects.
Shares of the online commerce platform Shopify fell 13.40%. If its quarterly results exceeded expectations, the projections disappointed.
Among the companies announcing their results after the close, Airbnb gave traders a smile.
After closing down 1.94%, the stock soared 8% in electronic trading.
The leader in furnished tourist accommodation posted better sales than expected for 2023, despite a quarterly loss due to a provision for tax charges in Italy. The group forecasts growth of 12% to 14% in its turnover in 2024.
Lyft, Uber’s competitor in car rental with driver, was levitating (+28%) after the close on the announcement of results exceeding expectations and the plan to reach operational breakeven in 2024.