Wall Street achieves a day of truce after a start to the year with investor sentiment deflated. Despite the high expectations of investors in companies listed on the Big Applethe beginning of the year has been marked by sales due to the strength of employment in the region, which the market took as a symptom of economic health, and therefore, a sign that the United States Federal Reserve will not cut interest rates. interest until summer. Expectations of a Fed with a stance hawkish for longer They have punished not only the stock markets, but fixed income has seen its returns increase rapidly. But, this Wednesday, the publication of the latest inflation data in the region has changed the photograph of this market, giving the return to the price of the S&P 500, which registered a 1.7% rise and remains above its key supports at the close of the European marketindicated between 5,830 and 5,780 points by the technical analyst and strategist of ecotraderJoan Cabrero.
At a technical level, the 5,830 points represent for Cabrero “the upper part of the gap that opened after the election of Donald Trump”, which “acts as a key barometer to determine whether an eventual decline or consolidation on Wall Street could lead to a broader corrective scenariocapable of materializing my hypothesis of a replica of the “earthquake” that we experienced in July, whose climax was reached on August 5,” says the strategist.
With this last rise in the session, it moves up to 2% away from this level, without having faced its last support: 5,780 points, which in the event that the 500 signature index “also loses that support would be confirmed without any kind of doubts a bearish head and shoulders reversal pattern which would open the door for us to witness a probable aftershock of the August earthquake,” says Cabrero. Furthermore, the analyst explains that, “in that case, Wall Street would enter a period of sales in January and we could end up having the opportunity to buy the S&P 500 in the area of 5,500-5,630 points“.
The US turns positive in the year
In this way, Wall Street’s main reference not only moves away from these bearish levels, but also manages to turn positive on an annual basis, after having been punished with falls during the first days of the year. The series of employment data that was published in the US last week, which showed a significant increase in hiring, was translated in the eyes of investors as a symptom that it will continue to increase inflation in the regionlimiting the Fed’s room for action with respect to monetary policy.
That’s why, Inflation has generated relief in stock market pricesdespite the fact that the consumer price index (CPI) rose two tenths to 2.9% year-on-year, in line with what the market expected, but the underlying inflation data is the reason for these new increases. The core CPI eased one tenth, to 3.2%, which is still high, but it is the first decline in the last six months, a happiness for investors, although Nor does it give the Fed more room to maneuver to lower the price of money.
From the corporate sphere they have also arrived good news to investors with the start of earnings season. The big Wall Street banks have leapt today at lecturein which the tone has been marked by the increase in profits, JP Morgan, Goldman Sachs, BNY and BlackRock far exceeded analysts’ expectations. On the other hand, Citigroup and Wells Fargo disappointed, although the former’s shares rose 7%.
The rest of the New York indices also benefit from the latest market movements. The technology benchmark, the Nasdaq 100, leads the gains this day, with a 2.2% rise at the close in Europe. In the year, the index of big tech Americans recorded a 0.8% increase. Meanwhile, the industrial index, the Dow Jones, overtakes the two giants on Wall Street, adding 1.7% at an annual level, thanks to the 1.7% rise of the last day.
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