[New York Stock Market] Rises on Eased Consumer Price Inflation Expectations... Nasdaq Up 1.76%

[Asia Economy New York=Special Correspondent Joselgina] Major indices of the U.S. New York stock market closed higher on the 11th (local time) as expectations for easing inflation were reflected ahead of the Consumer Price Index (CPI) announcement the next day. The Nasdaq index, centered on technology stocks, showed a rally for four consecutive trading days for the first time since September last year.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,973.01, up 268.91 points (0.8%) from the previous session. The large-cap S&P 500 index closed at 3,969.61, up 50.36 points (1.28%), and the Nasdaq index closed at 10,931.67, up 189.04 points (1.76%).

[Image source=Reuters Yonhap News]

All 11 sectors within the S&P 500 index showed gains. In particular, real estate and consumer discretionary stocks had large rallies. Representative meme stocks also rose one after another. Bed Bath & Beyond soared more than 68% compared to the previous session. GameStop rose 7.15%, and AMC Entertainment jumped 21.18%. Major tech stocks also increased. Tesla closed up 3.68%, Amazon up 5.81%, and Google Alphabet rose 3.51%. Airline stocks, including United Airlines (+1.96%), initially showed a decline before the market opened due to computer malfunctions affecting flights across the U.S. in the morning, but later turned upward following news of resumed operations.

The market showed bargain hunting mainly in stocks that had recently plunged while awaiting the December CPI to be released the next day. Daniel Yi, Chief Investment Officer at Port Pete Capital Group, said, "Today is all about positioning ahead of the CPI."

Currently, Wall Street investors expect the December CPI to rise about 6.5?6.6% year-over-year, down from 7.1% in the previous month. If the CPI, which exceeded 9% in June last year, slows to the 6% range, it could serve as evidence that the Federal Reserve's tightening policies are having an effect. Speeches by Patrick Harker, President of the Philadelphia Federal Reserve Bank, James Bullard, President of the St. Louis Fed, and Thomas Barkin, President of the Richmond Fed, are also scheduled for the next day.

As expectations for easing inflation continue, there are growing views that the Fed will again slow its pace at the Federal Open Market Committee (FOMC) meeting scheduled for January 31 to February 1. Susan Collins, President of the Boston Fed, said in an interview that "a 0.25 percentage point or 0.5 percentage point increase is reasonable," adding, "(I) lean toward a 0.25 percentage point increase, but it depends on the data." She mentioned, "By raising rates slowly, we have more time to evaluate data before making decisions," and "smaller changes provide more flexibility."

Earlier, Raphael Bostic, President of the Atlanta Fed, and Mary Daly, President of the San Francisco Fed, also left open the possibility of a baby step (a 0.25 percentage point increase), depending on CPI and other economic data. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds futures market on this day reflected more than a 77% chance of a 0.25 percentage point increase in February, up from the 69% range a week ago.

As investors awaited the CPI and other economic indicators, Treasury yields fell on this day. In the New York bond market, the 10-year U.S. Treasury yield dropped to around 3.53%. The 2-year yield, which is sensitive to monetary policy, fell to around 4.21%.

This week, the earnings season will kick off in earnest starting with major banks such as JPMorgan Chase, Bank of America (BoA), and Wells Fargo. According to FactSet, net earnings of S&P 500 listed companies for the fourth quarter of last year are estimated to have decreased by 4.1% compared to the same period the previous year. If so, it would be the first negative growth since the third quarter of 2020.

Oil prices continued to rise amid the possibility of additional sanctions against Russia. At the New York Mercantile Exchange, the price of West Texas Intermediate (WTI) crude oil for February delivery closed at $77.41 per barrel, up $2.29 (3.05%) from the previous day. On this day, the Wall Street Journal (WSJ), citing sources, reported that the U.S., along with the European Union (EU) and allied countries, is accelerating discussions on additional sanctions on Russia's energy industry following its invasion of Ukraine, and that price caps could be imposed not only on Russian crude oil and gas but also on refined petroleum products.