The New York Stock Exchange fell on Tuesday, reacting negatively to persistent inflation in the United States, which turned out to be higher than expected in January.
• Read also: United States: inflation slows less than expected in January, to 3.1% year-on-year
The Dow Jones index, after a record the day before, lost 1.33% around 3:30 p.m. GMT, the predominantly technological Nasdaq lost 1.59% and the S&P 500 dropped 1.36%.
Inflation in January in the United States surprised on the upside, with the consumer price index (CPI) increasing by 0.3%, more than in December and more than expected.
Over one year, price increases have certainly slowed to 3.1%, but less than expected. Core inflation, excluding energy and food, is stubborn, remaining at 3.9%.
“This data which shows a reacceleration supports the Fed’s opinion that interest rate cuts are not coming anytime soon,” commented Rubeela Farooqi, chief economist for HFE.
Bond rates rose sharply upon the announcement of these figures, with the ten-year rate climbing to 4.27% compared to 4.17% the day before.
“We are not at all surprised to see bond yields rise after this data” which are “an unpleasant surprise,” admitted Ian Shepherdson of Pantheon Macroeconomics.
According to him, this “does not change the situation,” however. The analyst expects a continued decline in inflation with a normalization of rents.
Investors now estimated only 33% chance of a Fed rate cut in May, compared to 52% on Monday, according to CME Group futures market calculations.
But as Chris Low, principal economist for FHN, pointed out, “what matters to the Fed is the PCE index, not the CPI.” This central bank favorite measure for gauging inflation will be released on February 29.
On Monday, Wall Street finished in disarray with the Dow Jones reaching a new record close on a consolidating market, awaiting inflation.
The Dow Jones gained 0.33% to 38,797.38 points, the Nasdaq index lost 0.30% to 15,942.54 points and the broader S&P 500 index fell 0.09% to 5,021.84 points.
On the market, Coca-Cola (+0.36%) took advantage of an increase in its volumes and prices to post more sustained growth than expected by the market in the fourth quarter of 2023.
Revenue reached $10.8 billion, up 7% year-on-year, and was higher than expectations. The soft drinks giant’s profit nevertheless fell (-3% compared to the same period of 2022), a reduction mainly due to unfavorable currency effects.
The American toy manufacturer Hasbro (-5.40%) saw its turnover plummet in the fourth quarter and forecasts a further drop in sales in 2024.
Sales totaled $1.29 billion, down 23% year-on-year. Like its competitors, Hasbro is facing a marked slowdown in the toy industry, which has just had a difficult year. Mattel shares also lost 2.79%.
Shares of the online commerce platform Shopify collapsed by almost 9%. If its quarterly results exceeded expectations, the projections disappointed.
The group reported revenue of $2.14 billion in the fourth quarter versus $2.08 billion expected.
The “Magnificent Seven,” the tech mega-caps, were all in the red. Nvidia lost 1.46%. The manufacturer of chips used in artificial intelligence had stolen the spotlight from Amazon the day before by briefly overtaking Jeff Bezos’ group in terms of market capitalization.
Meta lost 1.23%, Tesla 61.58%.
