Wall showed ‘character’ and closed with mild gains Wall – Third day of rise for Nasdaq

The Wall Street index ended Wednesday’s session with modest gains, despite a strong start, as once again the inflation data, which climbed to a high of almost 40 years, caused strong volatility in the market, with the indices returning intra-conference temporarily even in negative ground.

The market started with investors showing moods to drive the indices higher, as the inflation data announced before the start of the session was not worse than expected.

In particular, inflation continued its rally in December, showing the largest annual increase since 1982 at the end of the year, according to data released by the US Department of Labor. The consumer price index climbed to 7% in December after rising by 6.8% in November, while on a monthly basis it increased by 0.5%, exceeding the estimates of analysts who expected an increase of 0.4%, after increasing by 0, 8% recorded in November.

The structural index, which does not include food and energy, rose 0.6% in December after rising 0.5% in November, climbing to 5.5%. This is the highest level in the last 31 years.

However, estimates that inflation will remain high for some time to come, coupled with growing voices within the Fed that the Federal Reserve should move beyond raising interest rates and lowering its balance sheet, have prompted new worries.

Concerns about how the Fed plans to cut its balance sheet, such as through the possible sale of assets, a tool that President Powell did not rule out on Tuesday during a hearing by the Senate Finance Committee.

“We know that high inflation has a serious impact,” said Powell, who has pledged to use all of the central bank’s tools to prevent inflation from “consolidating.”
Powell, meanwhile, sought to reassure markets that the Federal Reserve would be cautious about not derailing the economy or causing damage to the labor market. “Now is the time to start moving from the pandemic emergency to a more normal level,” Powell said. “However, this should not have a negative impact on employment,” he added.

Cleveland Fed Chairman Loretta Mester made the same move earlier today, saying the Federal Reserve would like to cut its balance sheet quickly to a “more reasonable size” if the fast adjustment rate will not adversely affect the financial markets.

However, if the Fed starts selling bonds and other mortgages, rather than letting them mature and shrink its balance sheet, it would signal “a major shift in the last 10-12 years of monetary policy,” say economists who they wonder “what will happen if the biggest buyer of bonds now becomes a seller?”.

Indicators – Statistics

In the midst of this climate, for another day the nervousness in the market was evident, with the indicators after the initial strong start, slowing down and even returning to negative ground temporarily, but eventually closing with mild gains.

In particular, the Dow Jones industrial average, which started with an increase of more than 180 points, soon lost its gains and after fighting several times for the positive sign finally closed with small gains of 0.11% at 36,290.32 points. its second consecutive meeting since the beginning of the year.

The broader S&P 500 showed a slightly better picture, which after a short “passage” from the “red”, returned to positive ground and closed, also for a second day, with small gains of 0.31% at 4,727.60 points.

Third bullish session for the technological Nasdaq, but which was also temporarily in negative territory, before finally closing with gains but away from the highs of the day and specifically at 15,188.40 points, with an increase of 0.23%.

On the blue chips index, the picture was almost split, with 16 stocks recording gains of 0.14% to 1.27% and 14 closing with losses. The winners were led by shares of Salesforce with 1.27%, Nike with 1.27% also and Caterpillar with 1.11%, while the highest losses were recorded by the title of Goldman Sachs with -3.16%, followed by Johnson & Johnson with -0.85% and Walgreens Boots Allliance with -0.77%.