Shares rose mostly on Wednesday after new data showed easing of price pressures in April, offering some relief to investors worried about the Federal Reserve’s efforts to fight inflation.
The S&P 500 rose 0.4% in morning trading. The index broke a three-day losing streak on Tuesday, hitting a pause in a period of pressure that came as investors prepared for the Fed to continue raising interest rates to curb decades-high inflation.
The Dow Jones Industrial Average added 0.6%, while the technology-focused Nasdaq Composite fell 0.5%.
Yields on 10-year treasury bonds, which are at the heart of borrowing costs across the economy, rose to 2.996% from 2.990% on Tuesday’s settlement. Early in the morning, yields rose to 3.074% before falling. Bond yields and prices are moving in opposite directions.
The consumer price index rose 8.3% in April compared to the same month a year ago, slowing from 8.5% year on year in March, but above economists’ expectations of 8.1%. Lower annual inflation last month marked the first monthly easing of price increases since August 2021.
Investors hoping for a final sign that inflation is reaching its peak may have been worried about higher-than-expected readings, said Michael Farr, CEO and founder of Farr, Miller & Washington.
“The tape is still coming off slowly,” Mr Far said. “According to the Fed, we are not near the end of this process, which everyone wants to end.
The trajectory of inflation and wages will determine how much the Fed will raise interest rates at its next policy meeting. The central bank last week raised interest rates by half a percentage point, the biggest rise since 2000, and approved a plan to shrink its $ 9 trillion asset portfolio by boosting its 40-dollar campaign. -annual high inflation.
“What we saw this morning was mostly in line with expectations – at least my expectations,” said David Kotok, chief investment officer at Cumberland Advisors. Still, volatile markets are prepared to react strongly to any headline that hints at constant price pressure. “We are in such crazy times,” he said.
On Tuesday, traders worked on the New York Stock Exchange.
Photo: BRENDAN MCDERMID / REUTERS
Shares, especially in the United States, have been hit by a wave of sales in recent weeks. Investors are struggling with easy monetary policies, which have increased profits on stocks and bonds since the early days of the pandemic.
Adding to uncertainty for investors are the war in Ukraine, which led to even higher inflation by rising commodity prices, and the blocking of Covid-19 in China, which threatens to harm the global economy.
“If we only had rising interest rates, or just high inflation, or just China or just Ukraine, we could probably handle that,” said Daniel Morris, chief market strategist at BNP Paribas Asset Management. “But we have it all at once. That’s why it’s such a particularly challenging environment. “
Mr Morris said US stocks could come under additional pressure, saying valuations had fallen to mid-levels that were historically high before the sell-off.
Elsewhere, strong earnings reports from some companies led to profits. Shares of Electronic Arts rose 11 percent after the video game company said revenue rose 24 percent in the last fiscal year to $ 6.99 billion. Donut chain Krispy Kreme saw a 6.9% increase after announcing earlier Wednesday that net revenue had jumped 16% year-on-year in the three months to March.
Shares of Coinbase Global fell 17% after the cryptocurrency exchange said its users had declined from the previous quarter. Shares of Unity Software fell 30 percent after the video game developer increased its loss and gave earnings guidance for the second quarter below analysts’ expectations.
Switch rose 8.3 percent after the computer services company said it was privately owned by a consortium of investors.
Oil prices have risen. Brent oil, the global benchmark, rose 3.5 percent to $ 106.02 a barrel.
Overseas markets were generally higher. Stoxx Europe 600 rose 0.7%, driven by shares of car companies and real estate companies. In Asia, Hong Kong’s Hang Seng rose 1% and the Shanghai Composite Index added 0.8%.
Write to Joe Wallace at joe.wallace@wsj.com and Matt Grossman at matt.grossman@wsj.com
Copyright © 2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8
Add Comment