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Investors will be watching the US inflation numbers closely for November.
Inventories were higher on Friday after US consumer prices rose even more than expected in November. Markets have already reflected the chances of several Federal Reserve interest rate hikes in 2022.
In the morning exchanges, the
Dow Jones Industrial Average
is up 111 points, or 0.3%, with the
S&P 500
up 0.5% and the
Nasdaq composite
gain of 0.4%. The indices lost strength after the market opened.
The consumer price index rose 0.8% month over month in November, beating economists’ estimates by 0.7%. Year-over-year, prices rose 6.8%, the fastest annual increase since 1982. Investors wanted inflation to moderate, which would make the Fed less obligated to cut its policy so quickly. monetary support.
“Many have felt the effects of inflation on a daily basis, so it’s probably not a huge shock to the market,†wrote Mike Loewengart, Managing Director of Investment Strategy at ETrade.
The Fed – and the market – have also noted rising inflation. Central bank has indicated that he will increase the speed at which he ends his bond purchases program, opening the door to potential short-term interest rate hikes in 2022.
Markets were quick to reflect the chances that a sharp change in monetary policy could weigh on economic growth. Short-term Treasury bill rates have risen, while long-term bond yields, which often forecast longer-term economic demand and inflation, have fallen. The S&P 500 and the Dow are still trading below their all-time highs reached in November.
“The stock market will continue to rise as consumer spending remains strong and corporate profits – for now – continue to grow,†wrote Chris Zaccarelli, chief investment officer for the Independent Advisor Alliance.
This is because households are able to pay the highest prices in the short term, as they still hold trillions of dollars in excess cash compared to just before the pandemic. This is part of a picture that shows the aggregate earnings per share of the S&P 500 increasing 9% in 2022 and 10% in 2023, according to FactSet. All of these dynamics can often interest investors in buying stocks.
It is still important to note, however, that the stock market has recently shown weakness. Not only are the S&P 500 and the Dow still trading below their highs, many individual stocks are losing momentum. At the start of this week, the majority of stocks listed on the New York Stock Exchange were trading below their 200-day moving averages, meaning investors are losing confidence that stocks can maintain such bullish momentum.
Going forward, “increased volatility is likely over the next 6 to 12 months, as inflation, interest rates and Fed policy will all move much faster than in the past,” wrote Zaccarelli.
In Europe, the pan-European Stoxx 600 was mostly flat. Asian markets ended the day in the red, both
Nikkei 225
and that of Hong Kong
Hang Seng
indices down 1%. Japanese data showed inflation operating at an annual rate of 9%.
Here are five stocks in motion on Friday:
Lululemon Athletica
(ticker: LULU) the stock fell 2.1% after the company reported earnings of $ 1.62 per share, beating estimates of $ 1.41 per share, on sales of 1.45 billion dollars, above expectations of $ 1.44 billion.
Broadcom
(AVGO) gained 9.4% after the company reported earnings of $ 7.81 per share, beating estimates of $ 7.74 per share, on sales of $ 7.4 billion, above expectations of $ 7.36 billion.
Southwest Airlines
The stock (LUV) fell 3.6% after being demoted to Sell Neutral at Goldman Sachs.
Interactive Platoon
The stock (PTON) fell 1.9% after being downgraded to Neutral Outperformance at Credit Suisse.
Fiserv
(FISV) stock fell 0.9% after being downgraded to In-line from Outperform at Evercore.
Write to Jacob Sonenshine at jacob.sonenshine@barrons.com and Pierre Briançon at pierre.briancon@dowjones.com
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