Dow Jones closes in the red
Weak prospects for earnings season scare investors
January 12, 2024, 10:49 p.m
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The aftermath of the corona pandemic is still affecting the banking business. The balance sheets of various major banks disappoint stock market investors. New economic data on producer prices, however, provide relief as they point to further falling inflation.
A weak start to the US accounting season took its toll on Wall Street at the end of the week. The Dow Jones Index The standard stocks reduced their initial gains and were 0.29 percent weaker at 37,602.7 points. The broader one S&P 500 and the technology stock market index Nasdaq more or less stood still with 4784.87 and 14,976.96 points.
The weak balance sheets of the major banks weighed on sentiment Bank of America, Wells Fargo and JP Morgan. The securities of the financial institutions lost up to 3.3 percent. The experts had expected the difficulties. “Banks are currently struggling with the inverted yield curve, lower capital market turnover, weak demand for mortgage loans and other aftereffects of the corona pandemic,” explained Art Hogan, chief strategist at asset manager B Riley Wealth. However, according to analysts, the situation is likely to stabilize again as soon as falling interest rates support demand for loans and investment banking. The relief following new economic data therefore limited the losses.
Producer prices in the USA fell by 0.1 percent in December compared to the previous month. Economists polled by Reuters had expected an increase of 0.1 percent. Investors hope that the figures will prompt the US Federal Reserve to cut interest rates that have been raised to combat inflation. The prices apply ex works – i.e. before the products are further processed or traded. They therefore serve as an early signal generator for the development of consumer prices.
US shipping companies expect the situation in the Red Sea to ease
“Producer prices have undone the damage caused by yesterday’s consumer price disappointment,” commented Craig Erlam, analyst at trading house Oanda. “It’s clear from today’s data that inflation remains on a downward trajectory.” The uncertainty surrounding the situation in the Middle East caused prices on the oil market to rise. The North Sea oil Brent and US OIL WTI prices rose by 0.14 and one percent respectively to 78.4 and 72.74 dollars per barrel. After the attacks by the USA and Great Britain on the Houthi militia in Yemen, there is a risk of escalation in the Middle East region beyond the Gaza war . Investors feared that such a development could restrict global oil supplies.
In view of the naval operations, the US shipping companies are counting on a long-term easing of the situation in the Red Sea. The titles of American Tankers, DHT Holdings and Golden Ocean gained up to 2.76 percent. However, it came under pressure Tesla with a minus of 3.67 percent. The electric car manufacturer has to interrupt a large part of its vehicle production at the Grünheide plant in Brandenburg for two weeks. The reason is the lack of components due to the security situation in the Red Sea.
The significantly longer transport times created a gap in the supply chains. They are therefore forced to suspend production at the Gigafactory between January 29th and February 11th, with the exception of a few areas. The electric car pioneer is the first large company to limit its production due to the conflict in the Middle East.
Aviation stocks also flew out of the depots. A snowstorm over the Midwest of the USA has paralyzed parts of North American air traffic. As of Friday morning (local time), 1,643 flights were canceled and another 1,238 flights were delayed. The papers from Delta Air Lines, Southwest Airlines and Alaska Airlines lost up to nine percent.