Wall: Nasdaq gross signs and broad losses, with employment-inflation data in the background

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LAST UPDATE: 21.00

The main stock indices on Wall Street are moving with mixed signs, temporarily casting doubt on the momentum of recovery after the difficult first sessions of 2022, against the background of macroeconomic data in the US that show a slowdown in unemployment and persistent inflation.

On the dashboard, the industrial Dow Jones gains 55.29 points or 0.15%, with the widest S&P 500 to record a drop of 28.09 points or 0.59%, while the technological Nasdaq records losses of 209.8 points or 1.38%.

The bad day in which the shares of Big Tech, including those of Amazon and Microsoft, are negatively borne by the Nasdaq. Snap’s stock is losing more than 6%, while that of Virgin Galactic is “diving” up to 18%, as it announced the issuance of new debt. Tesla’s share loses more than 4%.

The fall in the tech industry closes the cycle of a three-day rally for the Nasdaq. Technology stocks have shown particular volatility since early 2022, with the Federal Reserve signaling that it intends to fight inflation aggressively, including by raising interest rates and lowering its balance sheet.

The share of Delta Air Lines is moving upwards, after the announcement of strong profits and revenues and the reaffirmation of its guidance for the whole year, while the share of the housing construction company KB Home jumps over 13%, after the announcement of stronger than expected profits.

Boeing sees its stock boost by about 4% following a report by Bloomber that the 737 Max aircraft will be able to return to China even in January.

US inflation data for December suggest that the upward trend may have begun to slow down.

Shares have been on an upward trend in recent days, with bond yields, on the other hand, moving downwards, in a reversal of the previous week.

“We expect the yield on the 10-year US government bond to move from the current 1.73% to 2% in the coming months, as investors incorporate in their estimates the Federal Reserve’s toughest monetary stance, the However, we do not expect to see a jump in yields that would jeopardize the stock rally. 2022 and then it will de-escalate, “said UBS financial analyst Brian Rose and his associates, in a note to the bank’s customers.

Markets have also turned their attention to Congress, where Lael Brainard, a member of the Board. of the US Federal Reserve (Federal Reserve), goes through the crisis of the Senate in order to assume the position of Vice-Chairman of the Monetary Policy Committee of the Fed (Federal Open Market Committee – FOMC).

The Fed should start raising interest rates from their current level close to zero in March and will likely need to raise interest rates at least three times this year to contain inflation, Philadelphia Fed Chairman Patrick Harker said on Thursday.

“My prediction is that we will have a 25 basis point increase in March, unless there are data changes,” Harker told a digital event hosted by the Philadelphia Business Journal.

“Based on what I know today, I would be in favor of that,” Harker said as the central bank prepares to tighten its monetary policy further.

He added that he was currently forecasting three rate hikes of 25 basis points this year and could be convinced of a fourth if inflation is not brought under control.

On Friday, before the start of the session, major US banks are expected to announce quarterly results.

Of the 30 Dow shares, 20 are positive and 10 are negative. The profits are led by those of Boeing, Caterpillar, Dow Inc., while those losses of Salesforce, Microsoft, Walt Disney.

Macro

The number of Americans who submitted new ones applications for unemployment benefits increased unexpectedly in the first week of January amid an outbreak of COVID-19 cases, but remained at a level consistent with rapidly tightening labor market conditions.

Initial applications for state unemployment benefits rose by 23,000 to a seasonally adjusted 230,000 for the week ending Jan. 8, the US Department of Labor announced on Thursday. Economists polled by Reuters had forecast 200,000 applications for the past week.

Applications remain below pre-pandemic level, indicating a strengthening of labor market conditions. They have fallen from the record high of 6.149 million in early April 2020.

Unemployment benefit applications remain very low despite the increase in coronavirus cases due to the Omicron variant, which has been shut down by airlines and schools.

The government said last Friday that the unemployment rate fell to a 22-month low of 3.9% in December, indicating that the labor market is at or near maximum employment.

The workforce is about 2.2 million smaller than before the pandemic.

An ascent to a new high was also recorded by US producer price index for December 2021, in another indication of inflationary pressures on the US economy.

According to data released by the US Department of Labor, producer prices on an annual basis increased by 9.7% compared to an increase of 9.6% in December 2020. Analysts polled by Reuters expected an increase in 9.8%.

This is the largest annual increase in the index since the relevant data began to be recorded in 2010, according to CNBC.

On a monthly basis, producer prices increased by 0.2%.

The structural index of producer prices, which does not include food and energy, increased in December by 8.3% on an annual basis, compared to an increase of 7.7% in December 2020, while on a monthly basis it increased by 0.5%.

Analysts expected an annual increase of 8%, while on a monthly basis the measurement moved within their estimates.

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