U.S. producer price index (PPI) growth slowed in March and jobless claims rose early last week, alleviating investors’ concerns regarding the Federal Reserve’s (Fed) raising interest rates to fight inflation, while also boosting their interest in rising interest rates. With hopes that the interest rate cycle is drawing to a close, major U.S. indexes opened higher on Thursday (13th).
before the deadline,Dow Jones Industrial AverageUp nearly 20 points or 0.05%,Nasdaq Composite Indexrose nearly 110 points or nearly 1%,S&P 500 Indexup nearly 0.3%,Philadelphia SemiconductorThe index fell nearly 0.3 percent.
Major index futures were higher ahead of the U.S. stock market open,Dow Jones IndexFutures rose nearly 0.1%,S&P 500 IndexFutures rose nearly 0.2%,Nasdaq 100 futures up nearly 0.4%; U.S. 10-Year Treasury Bond Yieldfell to 3.415%,dollar indexIt fell to 100.845.
The latest U.S. jobs report and producer price index (PPI) data came in below expectations, boosting investor confidence that the Federal Reserve’s (Fed) rate hike cycle is drawing to a close.
The number of people claiming unemployment benefits in the United States reported 239,000 people last week, higher than market expectations of 235,000 people, the first increase in three weeks, and the tight job market has loosened; the number of people continuing to claim unemployment benefits last week reported 1.81 million people, still hovering Near a 17-month high.
In addition, the PPI in the United States increased by 2.7% year-on-year in March, which was lower than market expectations of 3% and the revised previous value of 4.9%, which was the ninth consecutive month of slowdown; the monthly growth rate of PPI in March was -0.5%, which was lower than market expectations 0% and the previous value of 0%, slowing down for two consecutive months.
Prior to this, the US Consumer Price Index (CPI) report released yesterday showed that the overall inflation growth rate declined, but core prices rose slightly. In addition, last week’s non-agricultural employment report showed that the number of employed people in the United States grew steadily in March, and the unemployment rate fell to a near record low once more. The data tipped the swap market toward a one-yard (25 basis point) rate hike by the Fed in May, though traders further bet the Fed would cut rates by the end of the year faster than it had already done earlier this week.
Minutes from the Fed’s March meeting, released yesterday, showed policymakers scaled back expectations for rate hikes this year following a spate of bank failures roiled financial markets, stressing their vigilance over the possibility of a further slowdown in the credit crisis. Officials predicted that the U.S. economy might slip into a “slight recession” later this year, given their assessment of the potential economic impact of recent banking developments.
As of 21:00 on Thursday (13th) Taipei time:
Focus stocks:
apple (AAPL-US) rose 1.62% to $162.72 a share in early trade
Foreign media reports pointed out that Apple has significantly increased its iPhone production in India, accounting for nearly 7% of its total iPhone production, much higher than 1% in 2021. Through Foxconn (2317-TW), Pegatron (4938-TW), Apple assembled more than $7 billion worth of iPhones in India last fiscal year.
It is understood that in the past 12 months to March this year, Apple exported $5 billion worth of iPhones from India, almost four times the previous fiscal year. Apple may try to manufacture its next-generation iPhones simultaneously in India and China, sometime this fall. If so, it would be the first time a new iPhone will be assembled in both countries at the same time.
Delta Airlines (DAL-US) rose 0.11 percent to $33.78 a share in early trade
Delta Air Lines announced its earnings report for the last quarter before the opening bell, with revenue of $11.84 billion, lower than market expectations of $11.99 billion, and adjusted earnings per share of $0.25, which was also lower than market expectations of $0.29. Delta forecast second-quarter adjusted profit in the range of $2 to $2.25 per share, beating consensus estimates of $1.61. Looking ahead to the full year, Delta Air Lines estimates adjusted earnings per share of $5-6 for the full year, compared with market expectations of $5.37.
MSD (MRK-US) rose 0.48 percent to $114.30 a share in early trade
Shares of pharmaceutical giant Merck rose 1% premarket following Citigroup raised its rating on the stock to “buy” from “neutral,” arguing the company’s drug pipeline is undervalued and lowering its price target. That was raised to $130 a share, a 14% premium to Wednesday’s close.
Today’s key economic data:
- The number of people claiming unemployment benefits in the United States reported 239,000 last week, 232,000 expected, and 228,000 previously
- The number of Americans continuing to receive unemployment benefits last week was reported at 1.81 million, expected to be 1.814 million, and the previous value was 1.823 million
- The U.S. PPI annual growth rate in March reported 2.7%, expected 3.0%, and the revised previous value was 4.9%
- The U.S. March PPI monthly growth rate was -0.5%, expected 0.1%, and the revised previous value was 0%
- The core PPI annual growth rate in the United States in March was 3.4%, expected 3.4%, and the revised previous value was 4.8%
- U.S. core PPI monthly growth rate in March reported -0.1%, expected 0.3%, revised previous value of 0.2%
Wall Street Analysis:
James Athey, chief investment officer at Abrdn, said there was no overtly bad news in the economic data and the stock market took comfort from the Fed minutes suggesting a more dovish stance from the Fed compared with previous months.
Charles-Henry Monchau, chief investment officer of Syz Group, said that the recession mentioned in the Fed meeting minutes is only a “mild recession”, so the impact of the collapse of Silicon Valley Bank (SVB) has not been too serious for the economy so far.
