With losses per week, Wall looks at inflation and ‘gross’ banking results

The main Wall Street stock index closed the trading week with losses (four instead of five days, due to the Catholic Easter), in the aftermath of the announcement of results by major American banking giants, which in other cases brought smiles and in others disappointed, and the concerns raised by persistently high inflation in the US and internationally.

On the dashboard, the industrial Dow Jones lost 0.33% or 113.36 points, to 34,451.23, with the widest S&P 500 to decline by 1.22% or by 54 points, to 4,392.59 while the technological Nasdaq suffered losses of 2.14% or 292.51 points, to 13,351.08 points.

During the week, the S&P 500 lost 2.13%, with the Nasdaq “losing” 2.63% and the Dow recording losses of 0.78%. There will be no trading on Friday.

The downturn came at a time when inflation is in the center of investment attention, with indicators showing alarmingly high price increases on an annual basis. On Thursday, US government bond yields returned to multi-year highs, with the 10-year T-bond gaining 12 basis points, at 2.8%.

“What happens to returns directly affects equities at this stage, as it is another element that creates a negative, bearish climate that investors have to contend with,” said Adam Sarhan, founder and CEO of 50 Park Investments.

The consumer price index for March on an annual basis stood at 8.5%, the highest level since December 1981.

Shares in the tech industry fell almost symmetrically as bond yields rose, with Microsoft, Apple and Alphabet losing more than 2%. “Flights” for semiconductor companies were also low, with Nvidia and Advanced Micro Devices falling more than 3.5%.

The galloping prices reinforce the belief that the US Federal Reserve will move aggressively in raising interest rates in the coming months, with the member of the Board. Christopher Waller confirms that this is the most likely scenario.

“I think the evidence is coming in to support this very step in monetary policy, if the Fed committee chooses to do so,” he said, adding that he would favor a 50 basis point increase in May and new increases in meetings. June and July.

Twitter fell 1.9% despite its initial earnings after Elon Musk offered to buy the company for $ 54.20 a share and take it off the stock market. The strong man of Tesla and SpaceX said that this is his best and final offer for the company, estimating that only out of the stock market can he reform and “triumph”. Tesla shares also fell 3%.

Banking giants Goldman Sachs, Morgan Stanley and Wells Fargo announced their results for the first quarter of 2022 earlier. through the flattening of the yield curve.

Goldman Sachs shares lost 0.5%, although its results exceeded analysts’ expectations. Goldman reported earnings of $ 10.76 per share and revenue of $ 12.93 billion, compared with analysts’ estimates – in a Refinitiv survey – for earnings of $ 8.89 per share and revenue of $ 11.83 billion.

Morgan Stanley’s share gained about 1%, with the company also exceeding forecasts, recording earnings of $ 2.02 per share and revenue of 14.8 billion.

Shares of Citigroup (+ 1%) recorded earnings of $ 2.02 per share, compared to forecasts for $ 1.55.

Wells Fargo, on the other hand, fell more than 5% as its results disappointed analysts, while the bank predicts bigger losses on the loans it has provided in the near future.

“The bar is low for first quarter banking results,” said Stephanie Lang, CIO at Homrich Berg. “Passing this low bar is likely to drive stocks higher, with a positive increase in net interest rate gains as interest rates move higher.” he added. ”

Among the 30 Dow shares, 11 moved with positive signs and 19 with negative. The profits were led by their shares Nike, Caterpillar, Dow Inc. while those losses of Saleforce.com, Apple, Intel.

Unemployment benefit applications remained low for many years

The number of unemployment benefits in the US remained close to the low levels of many decades this week, despite the small increase.

In particular, in the week ended April 9, 185,000 Americans applied for unemployment benefits, compared to the revised 167,000 the previous week and analysts’ estimates of 170,000 new applications.

At the same time, applications for continued benefits amounted to 1.475 million in the week ended April 2, down from 1.523 million in the previous week, while it was lower than analysts’ estimate of 1.5 million.

Although new unemployment benefits have risen slightly more than expected, they are still close to the 54-year low recorded earlier this month.

Characteristically, the average number of new applications in 2019 before the pandemic was around 218,000 per week, while when the pandemic broke out in April 2020, they had even exceeded 6.1 million.

The US import prices accelerated to a 11-year high in March as Russia’s war with Ukraine boosted oil prices, another sign that high inflation could be sustained for a while.

Import prices jumped 2.6% last month, the biggest increase since April 2011, after rising 1.6% in February, the Labor Ministry announced on Thursday. In the 12 months to March, prices rose 12.5%, the highest since September 2011, after rising 11.3% in February. Economists polled by Reuters had forecast that duty-free imports would rise by 2.3%.

The Russia-Ukraine war has pushed up the prices of oil and other commodities, such as wheat and sunflower oil.

Imported fuel prices rose 14.6% last month after rising 10.0% in February. Oil prices rose by 16.1%, while the cost of imported food increased by 0.1%.

Excluding fuel and food, increases in import prices accelerated by 1.2%. These so-called key import prices rose 0.7% in February. In March, they jumped 7.1% year on year.

The report also showed that export prices rose 4.5% in March, the highest since January 1989, after rising 3.0% in February.

Agricultural export prices increased by 4.7%.

The retail sales in the US in March were lower than expected, gaining 0.5%, mainly due to modest sales at service stations due to rising prices. Analysts forecast an average increase of 0.6% in a survey by the Dow Jones network.