[New York Stock Market] Rising Close Awaiting CPI... Nasdaq Up 1.01%

[Asia Economy New York=Special Correspondent Joselgina] Major indices of the U.S. New York stock market closed higher on the 10th (local time) as investors awaited the release of the December Consumer Price Index (CPI) and earnings reports scheduled for this week.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average rose 186.45 points (0.56%) from the previous session to close at 33,704.10. The large-cap S&P 500 index increased by 27.16 points (0.70%) to 3,919.25, while the tech-heavy Nasdaq index climbed 106.98 points (1.01%) to close at 10,742.63.

[Image source=Reuters Yonhap News]

Among the 11 sectors of the S&P 500, all sectors except consumer staples showed gains. On an individual stock basis, Bed Bath & Beyond, which faced bankruptcy filing concerns, surged 27.78% despite reporting a larger-than-expected quarterly loss. Warner Bros. Discovery jumped 8.18% after being added to Bank of America’s (BoA) US1 list. Pharmaceutical company CureVac soared over 20% following announcements of vaccine trials for COVID-19 and influenza. Oak Street Health rose 27.47% on news that CVS might acquire the company for over $10 billion. Coinbase also gained nearly 13% after announcing plans to cut about 20% of its workforce to reduce costs.

Investors closely monitored Federal Reserve Chair Jerome Powell’s remarks while awaiting the December CPI release on the 12th and corporate earnings announcements. Megan Horman, Chief Investment Officer at Verdence Capital Advisors, said, "At least until Thursday’s CPI release and the start of earnings season, we expect a very tight trading range," adding, "There is a high likelihood of no clear market direction."

Currently, Wall Street investors expect the December CPI to rise 6.6% year-over-year, slowing from the previous month’s 7.1%. This week marks the start of the earnings season with major banks such as JPMorgan Chase, Bank of America (BoA), and Wells Fargo reporting results. According to FactSet, the net earnings of S&P 500-listed companies for Q4 last year are estimated to decline by 4.1% compared to the same period last year, marking the first negative growth since Q3 2020.

Amid ongoing expectations of easing inflation, Chair Powell reiterated the Federal Reserve’s independence at a symposium hosted by Sweden’s central bank, Riksbank. He noted, "When inflation is high, restoring price stability may require short-term unpopular measures such as raising interest rates that slow the economy." He emphasized that the Fed’s institutional framework, which allows it to set rates without direct political control from Congress or the White House, "enables necessary actions without political considerations." This was a clear public distancing from political pressures regarding the Fed’s rapid rate hikes.

Powell also reaffirmed that "price stability is the foundation of a healthy economy and will provide countless benefits to the public over time," underscoring that the Fed still prioritizes price stability. If inflation remains elevated this year, the Fed intends to continue its tightening path regardless of whether a recession occurs.

On the same day, Fed Governor Michelle Bowman said, "Although some inflation indicators have declined in recent months, there is more work to be done," forecasting further rate hikes. Jamie Dimon, CEO of JPMorgan and known as the "Emperor of Wall Street," also stated on Fox Business Channel that the Fed might need to raise rates into the 6% range. This far exceeds the Fed’s median year-end rate forecast of 5.1% presented in the December dot plot. He expressed concerns about entrenched high inflation, saying, "Inflation will not fall as much as people expect," but "it will definitely come down somewhat." Consequently, there is speculation that the Fed, having raised rates into the 5% range, could resume rate hikes in Q4.

In the New York bond market, U.S. Treasury yields rose on the day. The 10-year Treasury yield climbed to around 3.62%. The 2-year yield, sensitive to monetary policy, also reached about 4.25%. The inversion of the yield curve, where long-term 10-year yields fall below short-term 2-year and 3-month yields, continued. This is generally considered a precursor to a recession.

On the same day, the World Bank (WB) lowered its global growth forecast for this year from 3.0% to 1.7%. It warned that the global economy is "dangerously close" to a recession due to high inflation, interest rate hikes, and Russia’s invasion of Ukraine. The 1.7% growth rate is the lowest in 30 years, excluding recession years 2009 and 2020.

Also released on the day, the optimism index for U.S. small business owners worsened. According to the National Federation of Independent Business (NFIB), the December small business optimism index fell to 89.8 from 91.9 in the previous month, below the market expectation of 92. Despite recession concerns, the U.S. economy showed robust growth in Q4 last year. The Atlanta Federal Reserve Bank’s GDPNow model estimated Q4 growth at 4.1%. The November wholesale inventory increase of 1% matched expectations.

Chris Senyak, strategist at Wolfe Research, recently cautioned investors to be careful amid the rally. Analyses from Delos Capital Advisors and others suggested that the upcoming earnings season could act as a catalyst for a downturn.

Oil prices rose for the fourth consecutive trading day. On the New York Mercantile Exchange, February West Texas Intermediate (WTI) crude oil closed at $75.12 per barrel, up 49 cents (0.66%) from the previous session. This is attributed to growing demand expectations ahead of China’s Lunar New Year holiday.

This content was produced with the assistance of AI translation services.