Wall: Withstood the pressures with mixed signs

Wall Street withstood the pressure on Thursday, with the three indexes returning to recover from intraday lows of -2% and limiting losses (Dow and S&P 500) or making marginal gains (Nasdaq).

The U.S. stock market remains under pressure as inflation climbing to a beastly 9.1% bolsters the case for a 1 percentage point Fed rate hike, while early signs from the start of the corporate earnings season were rather ominous .

On the board, the industrialist Dow Jones closed on –0,46% or 140 units (intra-session he lost up to 600) on 30,630.27the enlarged S&P 500 slid against 0.3% and retreated to 3,790.34 unitswhile the technology-weighted Nasdaq showed marginal gains in the end 0.1% at 11,251.19 units.

The losses in the US market were gradually reduced after the statement of the member of the Board of the Federal Reserve Bank of the USA Christopher Wallerthat at this stage he himself believes that an increase in interest rates by 75 basis points is appropriate.

“You don’t really want to overdo it with rate hikes,” said Christopher Waller, speaking at the Rocky Mountain Economic Conference, noting that a 75 basis point rate hike is already “huge.” However, he left open the possibility of a “mammoth” Fed rate hike of 100 basis points at the end of the month if data show demand remains “really strong”.

It is recalled that at its last meeting the Fed increased its interest rates by 75 bp. (0.75%), in the first move of this magnitude since 1994, which brought its key interest rate to a range of 1.5% – 1.75%.

However, after the new inflation jump announced yesterday, traders are betting at a rate of 55% – as shown by the relevant futures – that the new increase in interest rates by the bank will be in the order of 100 points.

In between, the 10-year government bond of the US strengthened by 2.4 basis points to 2.96%, while the dollar added 0.8%.

Shares

At the same time, the first indications from the corporate results of the second quarter were negative, with JPMorgan Chase announcing decrease in profitability by 28%, below market estimates. In the wake of the announcement, the stock was at the center of sales, falling 3.5%.

Morgan Stanley also fell, which saw its stock drop 037% after missing estimates both in its profits and in its revenues.

Of the 30 stocks that make up the Dow, 11 closed with a positive sign and 19 with a negative. At the top is Boeing with an increase of 2.22%, followed by Apple at +2.05% and Walmart at +1.95%. On the other hand, Travelers Cos. recorded a “plunge” of 4.68%.

Macro

After the yesterday’s CPI shock which significantly exceeded already negative estimates, the producer price measure released today confirmed that inflationary pressures are deeply entrenched in the US economy.

Specifically, the producer price index rose 1.1% in June from a month ago, versus the 0.8% analysts expected and the 0.9% it had moved in May (revised upwards from the 0.8% initial reading).

On a year-over-year basis, the index came in slightly below estimates for 11.4% with the reading reading 11.3%, up from 10.9% last month.

In addition, applications for unemployment benefits rose by 9,000 to 244,000. Although this is the highest level recorded since November 2021, in absolute terms it shows a fairly strong labor market, which is also confirmed by the reduction in ongoing unemployment benefits which have now returned to pre-crisis levels.