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MARKET REVIEW. The New York Stock Exchange finished slightly higher on Wednesday, managing to digest a very high US inflation figure relatively well, even if the market is worried regarding the Fed’s trajectory in the face of the phenomenon that is taking hold.
Stock market indices at the close
In Toronto, the S&P/TSX advanced 120.19 points (+ 0.56%) to 21,395.00 points.
In New York, the S&P 500 closed 13.28 points (+ 0.28%) higher at 4,726.35 points.
the Nasdaq increased by 34.94 points (+ 0.23%) to 15,188.39 points.
the DOW rose 38.30 points (+ 0.11%) to 36,290.32 points.
the huard increased from US $ 0.0048 (+ 0.600 1%) to US $ 0.8001.
the oil rose from US $ 1.53 (+ 1.88%) to US $ 82.75.
L’or rose from US $ 8.50 (+ 0.47%) to US $ 1,827.00.
the bitcoin increased from US $ 1,377.87 (+ 3.22%) to US $ 44,135.37.
The context
The market greeted the release of the CPI price index rather gently, which reported inflation at 7.0% year-on-year, the highest pace since 1982.
So-called core inflation, which takes neither energy nor food into account, rose to 5.5% year-on-year.
“The CPI was in line with expectations,” said Gregori Volokhine, president of Meeschaert Financial Services, to explain the fact that the indices have kept their good orientation, following a first rise the day before.
However, investors are wondering regarding the trajectory of the American central bank (Fed) in the face of this inflationary surge which is taking hold, following having been presented for a long time as transitory.
For Adam Sarhan, founder and CEO of 50 Park Investments, the institution has not yet incorporated sustainable inflation into its forecasts, significantly higher than its objective of 2% per year. This makes investors nervous, “which explains why the sky has darkened” at the end of the session, he pleads.
The Dow Jones has even ventured into negative territory several times, before recovering in extremis. More than half of traders (55%) now anticipate at least four rate hikes by the Fed in 2022.
“Inflation, it is there, and it is setting in,” added Gregori Volokhine, “and it is beginning to be in sectors which are not transitory”. “We may be reassured to be at a plateau and that it is not higher, but this plateau is very, very high.”
The bond market tightened a little on short maturities, the benchmark rate for two-year US bonds rising to 0.91% once morest 0.89% the previous day. The 10-year rate remained stable at 1.74%.
On the market, following a good run during the first days of 2022, supported by the prospect of a rise in interest rates, some financial stocks have taken a break.
Goldman Sachs (GS) thus largely contributed to slow down the Dow Jones, in which it weighs more than 7%, dropping 3.16% to 390.31 $ US.
Also in the financial sector, investment banking Jefferies (JEF) slipped (-9.27% to US $ 37.59) following reporting lower than expected earnings and sales.
After suffering from the announcement of the acquisition of the brand Hey Dude, the manufacturer of plastic clogs Crocs (CROX) finally recovered on Wednesday (+ 6.84% to US $ 134.91). He announced Monday that its 2021 revenue will be 67% higher than its 2020 sales and confirmed its targets for its 2022 fiscal year.
The laboratory Biogen (BIIB) (-6.70% to US $ 225.34) suffered from the announcement of the US government that the Medicare program for seniors will reimburse its Alzheimer’s drug, Aduhelm, only for patients participating in clinical studies .
This greatly limits the eligible population among the more than 60 million Americans who benefit from Medicare. The average cost of the treatment is estimated by Biogen to be approximately US $ 28,200 per year.
In tune with raw materials in general, the mining group Freeport-McMoRan (FCX) (+ 5.02%) and the specialist in iron ore pellets Cleveland-Cliffs (CLF) (+ 3.92%) had the wind at their back.
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