The New York Stock Exchange on Wednesday welcomed with relief the slowdown in US price rises in July, which ended with a tech-sector-led jump.
According to the final results, the Dow Jones index rose 1.63% to 33,309.51 points, the Nasdaq jumped 2.89% to 12,854.80 points, its best result since late April, and the S&P 500 climbed 2 .13% to 4,210.24 points, reaching its highest level in three months.
All sectors of the S&P 500 ended positively, particularly discretionary spending (+2.81%), as investors see the modest price decline as relief and a step in the right direction for consumer spending, which powers two-thirds of the US economy .
The positive market reaction was not just for equities, but also for oil, which also ended higher, driven by a return in enthusiasm for risky assets.
The dollar fell 1% against the major currencies as investors believe the Federal Reserve (Fed) may be less strict on rate hikes going forward amid what appears to be peaking in inflationary pressures.
US CPI price index was flat over a month in July and over a year at 8.5% versus 9.1% in June. The prices have prevailed mainly thanks to lower fuel costs.
“Today is a day when good news for consumers is seen as good news by the markets,” responded B. Riley Wealth’s Art Hogan.
The calming of inflation means the Fed is unlikely to be as aggressive as it was in the last two currency meetings,” he added, explaining the market’s “celebrations”.
However, soon after the inflation release and the market’s reaction was so positive, Federal Reserve officials recalled that the Fed remained committed to containing inflation by tightening monetary policy.
For example, Minneapolis Fed’s Neel Kashkari reminded that “we were very, very far from declaring victory over inflation” and that the goal remains to bring it down to 2%.
Those words of caution did little to dampen investor enthusiasm, with a large majority (58%) now betting on a half a percentage point rate hike by the Fed in September, rather than three-quarters of a point (0.75%) that the was estimated the day before, according to futures.
10-year bond yields fell sharply shortly after the inflation figures were released, even falling to 2.72% before recovering to 2.79% by 2000 GMT.
Publicly traded Tesla shares climbed 3.89% to $883.07 as its boss Elon Musk sold nearly $7 billion of his shares, a “poker move” by the multi-billionaire who, for example, predicted an amicable settlement in the failed takeover of Twitter . suggested AFP Dan Ives, analyst at Wedbush Securities.
Twitter was also up 3.74% to $44.43.
All the big names in tech have rebounded, from Meta (Facebook, +5.82%) to Netflix (+6.16%), through Alphabet (Google), Apple and Microsoft, all down more than 2%.
Disney rose 3.98% to $112.43 before surging almost 6% in e-commerce after the close on the release of better-than-expected quarterly results and notably the contribution of 14.4 million additional subscribers.
Airplane maker Boeing rose 2.53% to $169.02 after American Airlines announced it had received its first 787.
The US Federal Aviation Administration (FAA) said on Monday that Boeing had made the “necessary changes” to resume deliveries of its 787 Dreamliner after it had been completely grounded since May 2021 due to operational problems.
Shares of cryptocurrency exchange Coinbase rose 7.37% to $94.14 on the day after disappointing second-quarter results led to a sharp decline in the price. But the stock lost 1.36% after the close.