(New York) The New York Stock Exchange was looking for direction in early trading on Wednesday, after initially opening in the red, unsettled by a US price indicator that showed inflation remains very high.
After going back and forth several times in the opening minutes of the session, the Dow Jones rose 0.70%, while the tech-heavy NASDAQ index lost 0.17% and the broader S index
The New York market was preparing to open in the green when the CPI consumer price index for April was published at 8:30 a.m., which came out at 0.3% over one month, more than the 0.2% expected by economists.
Over one year, it reached 8.3%, down from 8.5% in March, but higher than the 8.1% expected and still close to its highest level in forty years.
“The market is desperate for some breathing room on the inflation front,” said Adam Sarhan of 50 Park Investments. “But instead, he has to digest inflation that remains stubbornly high. »
Economists have noted in particular that if the prices of energy or used cars slowed, they picked up speed in services and did not come back down for food.
Immediately after the publication of the CPI, rates rose sharply. The yield on 10-year US government bonds, which had fallen to 2.91% earlier, climbed to 3.07%, before returning to 3.00%.
The likelihood of the US central bank (Fed) further tightening monetary policy, as assessed by investors, rose on the heels of the CPI.
Operators now estimate a 73% chance that the Fed will raise rates by two percentage points by the end of the year, a rate more seen in more than forty years, against 50% on Tuesday.
“Inflation is not going away anytime soon and the Fed needs to deal with it,” commented Adam Sarhan.
As a result, investors are worried that the Fed will rev up even further while the US and global economy is already showing signs of slowing down.
“This (price) report has brought us more uncertainty,” Adam Sarhan summed up, “and the market doesn’t like it.”
For Briefing.com’s Patrick O’Hare, the rebound in the indices shortly after the open could be explained by the fact that the reaction to the CPI, even negative, was limited, reassuring Wall Street.
The valuation levels now considered attractive for certain stocks, after a disastrous start to the year, were also likely to encourage bargain purchases.
Finally, Wall Street relied on so-called defensive stocks, in particular the industrial sector, such as Caterpillar (2.50%), Chevron (2.54%), Boeing (2.09%) or Dow (2 .46%).
In contrast, the Coinbase cryptocurrency trading platform was in free fall (-21.43% to 57.35 dollars), after the publication, Tuesday after trading, of results below expectations.
In tune with the cryptocurrency rout, the group saw monthly user numbers and transaction volumes fall from the fourth quarter.
The whole sector was in turmoil, from the Robinhood exchange platform (-3.24%) to the indexed fund ProShares Bitcoin Strategy ETF (-1.76%).
Launched with fanfare last October, the first investment product of its kind in the United States has since lost more than half of its value.
Electronic Arts rose sharply (-9.81% to 122.55 dollars) despite the announcement of the end of its historic partnership with FIFA on the game of the same name, as well as quarterly results below expectations.