[New York Stock Market] Rising Ahead of Consumer Price Index... Nasdaq Up 1.48%

[Asia Economy New York=Special Correspondent Joselgina] Major indices of the U.S. New York stock market closed higher on the 13th (local time) as investors awaited the Consumer Price Index (CPI) announcement scheduled for the next day.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 34,245.93, up 377.66 points (1.11%) from the previous session. The large-cap S&P 500 index rose 46.83 points (1.14%) to 4,137.29, and the tech-heavy Nasdaq index gained 173.67 points (1.48%) to close at 11,891.79.

Among the 11 sectors of the S&P 500, 10 sectors excluding energy showed gains. Notably, rallies in technology, communication, and discretionary consumer stocks sensitive to interest rates stood out. Microsoft (MS) rose more than 3% from the previous session, leading the Dow. Nike, Salesforce, and Intel also jumped 2.5%, 2.3%, and 2.61%, respectively. Meta rose over 3% following foreign reports of potential additional layoffs. Twilio increased 2.08% after announcing plans to cut 17% of its workforce. Ford Motor Company closed up 2.83% after officially announcing a partnership with China’s CATL to establish a wholly owned electric vehicle battery plant in Michigan.

[Image source=Reuters Yonhap News]

Investors monitored corporate earnings announcements while awaiting the January CPI release on the 14th. The January CPI is expected to have risen 0.4% month-over-month and 6.2% year-over-year. The year-over-year figure is anticipated to continue the trend of inflation slowing. The core CPI for January, excluding volatile energy and food prices, is estimated to have increased 0.3% month-over-month and 5.4% year-over-year.

The rally on this day indicates that investors are placing more weight on the slowing CPI. Ray Parry of Credit Suisse said, "The Goldilocks scenario and expected inflation slowdown this quarter helped boost market risk appetite and stock prices." Sam Stovall, Chief Investment Strategist at CFRA Research, noted, "Investors are expecting favorable inflation that could trigger a stock market rally." The decline in gold prices on this day also reflects these expectations of easing inflation. Tariq Zahir of Tike Capital Advisors commented, "Trading volumes across all markets were low as investors awaited the CPI data."

However, Federal Reserve (Fed) officials continue to emphasize that despite recent signs of inflation slowing, service and housing rental prices remain high, and they have been issuing hawkish remarks advocating for maintaining interest rates at restrictive levels for the time being. On this day, Fed Governor Michelle Bowman attended a conference and stated, "Inflation remains high," advocating for continued rate hikes.

Accordingly, investors are expected to closely examine specific CPI components such as goods, services, and housing rental prices. The Wall Street Journal (WSJ) reported that while the CPI is expected to slow this week, detailed components may vary, highlighting the importance of monitoring goods, services, and housing rental prices. Mohamed El-Erian, Chief Economic Advisor at Allianz, appeared on CNBC’s Squawk Box and said, "The market is beginning to sense that the inflation easing narrative, which has been very reassuring, is more complicated than we hoped." Other economic indicators released this week, such as retail sales and industrial production, are also considered variables that could increase market volatility.

In the New York bond market, U.S. Treasury yields showed mixed movements as investors awaited the CPI. The 10-year yield slipped to around 3.71%, while the 2-year yield, sensitive to monetary policy, rose to about 4.51%.

The value of the U.S. dollar declined. The Dollar Index, which measures the dollar against six major currencies, moved down about 0.3% to the 103 level compared to the previous session.

Corporate earnings announcements continue. This week, Coca-Cola, Airbnb, Marriott International, Cisco Systems, AIG, Kraft Heinz, Marathon Oil, and DoorDash are scheduled to report earnings.

According to FactSet, among companies that have reported earnings so far, 69% have posted profits exceeding expectations. This is below the five-year average of 77%. Additionally, fourth-quarter net profits are expected to decline 4.9% year-over-year, marking the first drop since the third quarter of 2020.

Credit Suisse forecasted a 2.2% decrease in EPS estimates for the fourth quarter of last year. Jonathan Golub, U.S. Equity Strategist at Credit Suisse, stated in a memo to clients, "Excluding the 2001 recession, financial crisis, and early pandemic period, this is the largest decline in 24 years." Credit Suisse also added that the outlook for the first quarter of this year is weak.

International oil prices rose for the second consecutive trading day. On the New York Mercantile Exchange, March delivery West Texas Intermediate (WTI) crude oil closed at $80.14 per barrel, up 42 cents (0.53%) from the previous session. This is the highest level since January 26.

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