The New York Stock Exchange closed in disorganized order Monday evening after a calm session, investors digesting data on inflation in the United States published Friday while Wall Street was closed. The Dow Jones index lost 0.60% to 39,566 points, while the S&P500 lost 0.20% to 5,243 points. The Nasdaq Composite gained 0.11% to 16,396 points.
The PCE consumer price index finally increased in February by 0.3% month-on-month and 2.5% year-on-year, while economists polled by Reuters had on average expected an increase of 0.4%. over one month and 2.5% year-on-year.
This easing of inflationary pressures rather encourages expectations of an upcoming reduction in interest rates from the Federal Reserve. Jerome Powell explained that the slowdown in PCE inflation in the United States, in line with expectations, was a good thing, while the Federal Reserve is no longer concerned only with inflation. The Fed Chairman noted: “My first thought was that PCE inflation was in line with expectations, which is a good thing,” said Jerome Powell, speaking from the San Francisco Fed. Francisco.
As inflation continues to decline, it is no longer relevant to only take this indicator into account…
“We are now thinking about both the risks to employment and inflation,” said Jerome Powell.
With the presidential election approaching, some observers are concerned about the impact of the electoral calendar on the monetary institution… “We will not make decisions based on the political calendar”, dismissed Jerome Powell, recalling that the central bank was an independent institution. The central banker, however, underlined the significant American budget deficit, while the debt represents 112% of GDP according to the ECB, close to its record reached at the start of 2021. “We are not on a sustainable budgetary trajectory. The sooner we find a sustainable trajectory, the better,” continued the Fed Chairman.
Remember that at the end of last week the S&P 500 record fell in the wake of a slight upward revision of the US GDP figures for the fourth quarter. On the Nymex, a barrel of WTI crude gained 2.5% to $84.3. The dollar index advanced 0.8% against a basket of currencies while the euro returned to 1.0730/$.
The final US GDP for the fourth quarter of 2023 increased at a rate of 3.4%, while the market consensus was 3.3% according to FactSet and the previous assessment at 3.2%. The price index linked to GDP increased at a rate of 1.6%, as expected. Personal consumption expenditure increased at a rate of 3.3%, above the expectations of local economists.
On Monday, the Institute for Supply Management (ISM) said its manufacturing PMI rose to 50.3 last month from 47.8 in February, rising above 50 for the first time since September 2022. The performance of 10-year Treasuries reached a peak in two weeks, in the wake of the publication of this manufacturing index, enough to cool (a little) the enthusiasm of stock market participants on the stock market.
Fed Governor Christopher Waller previously indicated he was in “no rush to cut rates.” During a speech in New York, Waller displayed a rather cautious stance, specifying that the latest data indicated to him that it was prudent to keep rates (between 5.25 and 5.50%) at the restrictive level. current perhaps longer than previously envisaged, in order to bring inflation back to the sustainable trajectory of 2%. Waller still expects a rate cut this year, but does not intend to adjust monetary policy until he sees further evidence of a continued decline in inflation…
While the S&P 500 has already gained nearly 10% this year, some strategists such as those at JP Morgan and Morgan Stanley are more cautious and believe that high valuations will be difficult to justify if they are not accompanied by a significant improvement in corporate profits. The first quarter financial publication season will begin in a few days and will therefore be of major importance, while euphoria in the artificial intelligence segment and expectations of a rate cut have supported the markets for the time being. ..
Values
Exxon gained 0.6% following the rise in oil prices to more than $84 per WTI in an international context that remained tense and after better than expected activity indicators in China. Manufacturing activity thus progressed in March for the first time in six months, showed an official survey published on Sunday.
The official manufacturing PMI index stood at 50.8 last month, after 49.1 in February, returning above the threshold of 50 which separates contraction and expansion of activity. The consensus was 49.9.
Data released separately by the National Bureau of Statistics (NBS) indicate that activity in the services sector continued to increase in March.
The services PMI rose last month to 53.0, from 51.4 in February. The composite PMI, which combines the two sectors, stood at 52.7 in March, compared to 50.9 the previous month.
Apple (-0.8%). According to a study by Counterpoint Research, smartphone shipments worldwide could increase by 3% this year with the slowdown in inflation, which would allow demand to recover, particularly in emerging markets… The integration of generative artificial intelligence would also be particularly positive for high-end segments like that of Apple… Among the other major stocks followed, Nvidia is stable.
Microsoft takes 0.9%. The United States House of Representatives has decided to ban members of Congress from using Copilot, Microsoft’s artificial intelligence (AI) assistant. “The Microsoft Copilot application has been deemed by the Office of Cybersecurity to pose a risk to users due to the risk of data leaking from the House to ‘cloud’ services not approved by the House,” said Catherine Szpindor , administrative director of the Chamber, cited by Axios. “We accept that government users have higher data security requirements. That’s why we’ve outlined a roadmap for Microsoft AI tools, like Copilot, that meet the requirements of security and compliance requirements of the federal government and which we intend to deliver later this year,” a Microsoft spokesperson told Reuters.
Tesla lost 0.3%. Tesla raised the price of its Model Y produced in China by 5,000 yuan (639.27 euros) on April 1. Tesla had previously announced its intention to increase the price of its Model Y electric SUV by around 2,000 euros, or an equivalent amount, in several European markets starting March 22.
The manufacturer had already announced an increase of 1,000 dollars for the Model Y in the United States from April 1…
