Wall Street appears relatively hesitant before the market this Friday, like the day before…
(Boursier.com) — Wall Street appears relatively hesitant before the market this Friday, like the day before. The S&P 500 gains 0.1% and the Dow Jones 0.2%, but the Nasdaq is slightly in the red, awaiting a new inflation index and a good series of banking results across the Atlantic.
On the Nymex, a barrel of WTI crude gained 2.7% to nearly $74. An ounce of fine gold rose 1.2% to $2,044. The dollar index stabilizes against a basket of reference currencies.
Yesterday’s publication of an American consumer price index showing growth slightly higher than expected did not significantly change expectations of monetary easing. According to the FedWatch barometer, the probability is more than 95% that the Fed will opt for a monetary status quo on January 31, leaving its rates unchanged between 5.25 and 5.50%, while the first easing would take place on March 20 (68% probability). The same tool shows that rates could end the year in a range of 3.75 to 4% (40% probability), or between 3.5 and 3.75% (32% ‘proba’).
However, the American inflation figures for the month of December were somewhat disappointing. Thus, the report published yesterday showed a consumer price index increasing by 0.3% compared to the previous month, against 0.2% market consensus. Over one year, this indicator increased by 3.4% compared to 3.2% consensus. Excluding food and energy, the December CPI increased by 0.3% compared to the previous month, in line with market expectations, and by 3.9% over one year. A month earlier, the CPI had increased by 0.1% compared to the previous month and by 3.1% year-on-year (+0.3% and +4% excluding food and energy).
Loretta Mester, head of the Cleveland Fed, said yesterday on Bloomberg that March would likely be too early for a rate cut because the December CPI report shows there is still work to do . She also said it would be appropriate to begin negotiations on ending ‘QT’ (quantitative monetary tightening by reducing the Fed’s balance sheet) this year, but not imminently. Thomas Barkin, another voting member of the Fed and head of the Richmond branch, also offered a cautious outlook on the rate cut timetable, saying he still needs to be convinced that inflation is stabilizing and that he would be open to a rate cut once inflation is on track to reach the famous 2% – the objective of the American central bank.
Mester and Barkin thus maintained a cautious posture, as did John Williams, president of the New York Fed, on Wednesday, who declared that the policy was restrictive enough to bring inflation back to the 2% target, but that the Fed would need to maintain a restrictive policy for some time to fully achieve this goal.
Note that on the economic front this Friday on Wall Street, operators will still be able to follow at 2:30 p.m. the producer price index for the month of December (FactSet consensus +0.2% compared to the previous month, i.e. +1.4% over one year, +0.2% m/m and +2% year-on-year excluding food and energy). Neel Kashkari, head of the Minneapolis Fed, will speak today.
In corporate news on Wall Street, banks and financial institutions are kicking off the 4th quarter results season today. UnitedHealth, JP Morgan Chase, Bank of America, Wells Fargo, BlackRock, Citigroup And Bank of New York Mellon, thus reveal their accounts before the market. The airline company Delta Air Lines also released today… “Fresh off their best quarter since 2021, bank stocks are poised for a high-stakes earnings showdown, as Wall Street’s most influential executives give investors their latest take on the “American economy,” warns Bloomberg.
Next week, the results announcements will accelerate, including Morgan Stanley, Goldman Sachs And PNC Financial Tuesday, Prologis, Charles Schwab, U.S. Bancorp, Kinder Morgan, Discover Financial Services, Citizens Financial And Alcoa Wednesday, then Truist Financial, Fastenal, M&T Bank, J.B. Hunt, Northern Trust, KeyCorp, Birkenstock, First Horizon And PPG THURSDAY. Schlumberger, The Travelers Companies, Fifth Third Bancorp, State Street, Comerica, Huntington Bancshares And Regions Financialwill announce in particular on Friday.