Dow Jones just before 40,000
Inflation report lifts sentiment on Wall Street
May 15, 2024, 11:06 p.m
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At the end of the day things are going well again on Wall Street. The reason for this is that inflation is now somewhat weaker. This also provides hope for an imminent change in monetary policy. This is again driving US investors’ desire to buy.
Interest rate hopes following the US inflation report for April have pushed Wall Street indices to new all-time highs. The Dow Jones Index the standard values closed 0.9 percent higher at 39,908 points on Wednesday. Over the course of the year he moved within 65 points of the 40,000 mark. The broader one S&P 500 rose to 5311 points and closed 1.2 percent higher at 5308. The technology exchange index Nasdaq ended trading 1.4 percent up at 16,742 positions, seven points below its daily high.
Inflation in the USA weakened somewhat in April – to 3.4 percent compared to the same month last year, after 3.5 percent in March. Economists had expected this. From March to April, prices rose by 0.3 percent. Experts had expected 0.4 percent here. “The first positive inflation surprise since the turn of the year will dispel fears that inflation is trending upward again,” said Seema Shah, chief strategist at asset manager Principal. “It can only be received positively by the market as it brings the Fed’s rate cuts for 2024 back into play.” The monetary authorities around Fed Chairman Jerome Powell are trying to use increased interest rates to bring inflation down to the target value of two percent without strangling the economy.
The recent slow decline in inflation had caused stock market traders to postpone their forecasts for the Fed’s first interest rate cut from March to September. The probability of monetary policy easing in the first month of autumn is currently estimated at around 75 percent on the futures markets. Before the US inflation report it was around 65 percent. Falling interest rates in the Fed’s decisions in November and December are still considered very likely. The dollar index fell 0.7 percent to 104.31 points after the publication.
Bitcoin is climbing
In return, the euro gained 0.6 percent to $1.0884. Investors in the crypto market also liked the US inflation data. Bitcoin climbed seven percent to $65,960. Other cyber currencies such as Ethereum and Ripple also gained. “Investors’ interest rate reduction fantasies are likely to further play into the hands of risky and interest-free investments,” stated Timo Emden from the analysis house Emden Research.
The latest rally in so-called meme stocks was initially over. The shares of the video game retailer GameStop fell by 19 percent, and those of the cinema chain AMC fell by 20 percent. A planned billion-dollar sale of a loan package from the US regional bank New York Community Bancorp failed to convince investors. The stocks reduced their initial gains of up to around three percent and lost 5.7 percent. The financial institution wants to sell mortgage loans worth around five billion dollars to JP Morgan. The deal is expected to strengthen the bank’s liquidity.
At the same time, according to experts, it could put pressure on profitability. Shares from the pharmaceutical companies Vanda and Biogen were in demand. The papers climbed by almost five and almost four percent respectively. Vanda had announced that a second study had confirmed the effectiveness of the drug Tradipitant against motion sickness. At Biogen it was a milestone for the new Alzheimer’s drug Leqembi. Partner Eisai said it had initiated the approval process for a new dosage form of the product.
You can find everything else about today’s stock market events here.