2024-01-13 20:09:16
Wall Street Stock Exchange
US stock indices achieved clear weekly gains during the week ending January 12, erasing the strong losses they incurred in the first trading week of the new year, as the S&P 500 index achieved weekly gains of 1.48%, meaning the benchmark index rose by 86.61 points.
Likewise, the Nasdaq Composite Index gained approximately 3.23%, or 526.94 points; To conclude the week’s trading at the level of 16,832.92 points, the profits of the Dow Jones Industrial Average reached 0.34%, recording 37,592.99 points at the close of the week’s trading, meaning it rose by approximately 126.87 points.
These strong weekly profits were supported by a recovery in risk appetite in the US stock market, as the VIX index for volatility performance in the US stock market settled at 12.70 points, a decrease of 4.89%, reflecting a recovery in investor sentiment for risk taking in the stock market.
Below, we can discuss the most prominent factors that contributed to enhancing investors’ risk appetite towards the American stock market:
First: Increasing market expectations regarding the imminent date of the US interest rate cut
US stocks received significant support as a result of market expectations of the end of the US tightening cycle and the start of lowering interest rates in the US early this year, noting that the recent statements of some members of the US Federal Reserve, along with producer price data for December, have raised these expectations, as follows: :
- The statements of members of the US Federal Reserve on monetary policy, which officials revealed at the end of the week, were characterized by being less stringent, as the statements in their entirety touched on the fact that inflation within the United States is witnessing a noticeable decline, with expectations that this decline will continue in the coming period, reaching regarding 2.25% this year, and confirmation However, the US Federal Reserve has made progress in the battle to curb inflation in 2023, in addition to indicating that current interest rates are at sufficiently tightening levels. These statements fueled traders’ expectations regarding the end of the monetary tightening cycle and the imminence of an interest rate cut, which provided strong support for US stock earnings this year. the week.
- At the same time, lower-than-expected producer price data reinforced the same belief that the US Federal Reserve will abandon high interest levels and begin cutting rates early this year. The index recorded regarding 1.0% on an annual basis, compared to the November reading, which stabilized at 0.8%.
Second: The strong decline in US Treasury bond yields
The sharp decline witnessed in US Treasury bond yields contributed to enhancing the profits of US stock indices this week, in light of the inverse relationship between the two parties, as the standard 10-year US Treasury bond yield incurred losses of regarding 0.68%, and this was in favor of US stocks.
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