Wall Street Picks Up Momentum
In the aftermath of a triumphant day one, investors on Wall Street maintained an optimistic vibe on Wednesday. The evasion of a potential US shutdown, for now, also contributed to this positive mood. The Dow temporarily eclipsed the 35,000-point mark before closing higher. Among the individual stocks, Target was on a meteoric rise.
The market's bullishness continued at a more measured pace midweek. The US inflation data, released the day prior, hinted at the peak of interest rates. Additionally, the averted US shutdown further bolstered investor confidence. The Dow Jones index wrapped up the day with a 0.5% increase at 34,991 points, briefly touching the 35,000-point threshold. The S&P 500 and Nasdaq Composite saw gains of 0.2% and 0.1%, respectively.
The retail sales sector, however, failed to ignite any significant market reaction. The sector experienced a negligible 0.1% decrease compared to expectations, with economists forecasting a more substantial drop. The lower producer prices merely served as confirmation of the previous day's inflation data. Meanwhile, business activity in the manufacturing sector in the New York metropolitan area witnessed a considerable surge in November, contrary to predictions.
"The drop in consumer prices has prompted investors to dramatically reduce the likelihood of another rate hike in this cycle," noted Deutsche Bank Research. The markets had even tipped the odds of a US Federal Reserve rate cut in May from 23% to 86% after the lower-than-expected inflation data.
Oil Prices Dive
The US dollar showed only a slight recovery from its heavy losses on Tuesday. The dollar index rose by 0.4% following a 1.5% decline the previous day due to soft inflation data.
Oil prices plummeted. Brent and WTI prices dropped up to 2.2%. Analysis of weekly oil storage data indicated substantial inventory build-up. However, earlier published industry data had already pointed to the increase in inventories.
The US bond market saw a reversal in its trajectory, following its steep dip on Tuesday. The yield on the 10-year bond improved by 9.5 basis points to 4.54%. Despite this development, investors remain confident in the Federal Reserve's decision against raising interest rates further and are increasingly placing bets on an imminent transition to rate cuts.
Thursday's preliminary jobless claims figures are anticipated to confirm a deceleration in the labor market, according to reports.
Target's Ascent
Target soared by 17.8%. The retailer reported a less drastic decline in comparable sales in the quarter ending October 28, at 4.9%, compared to the 5.2% analysts had estimated.
Getty Images, the picture agency, dipped 1.6%. The company revised its 2023 outlook in light of challenges such as Hollywood strikes and a stronger dollar. Cisco, the network equipment provider, reported its first-quarter results post-trading, following which its shares tumbled by 9%.
Some highlights of this trading day:
- Averted US shutdown and lower-than-expected US inflation data spurred market optimism.
- The Dow Jones index closed 0.5% higher, influenced by these factors, with Target leading the index's gains.
- Oil prices fell, while the US dollar and bond yields saw slight improvements.
