2023-12-13 21:38:55
A Christmas tree in front of the New York Stock Exchange (AFP / ANGELA WEISS)
The New York Stock Exchange closed higher on a record Wednesday celebrating the status quo of the American Central Bank (Fed) on rates and the possibility of future cuts, which caused bond yields to fall.
The Dow Jones index gained 1.40%, climbing above 37,000 points for the first time in its history, to 37,090.24 points. The technology-dominated Nasdaq gained 1.29% to 14,720.66 points and the S&P 500 climbed 1.37% to 4,707.09 points.
Bond rates, which move in the opposite direction to bond prices, fell to their lowest since early August for ten-year rates at 4.01% (-4.39%) around 9:00 p.m. GMT, compared to 4.20 % the day before.
The meeting of the Fed Monetary Committee (FOMC) was “very dove”, summarized Peter Cardillo of Spartan Capital, borrowing the language of stock marketers to describe a more accommodating attitude from the Central Bank.
As expected, the committee kept rates unchanged for the third time in a row, leaving them at their most severe level in 22 years to curb inflation.
But the Central Bank’s economic forecasts are more optimistic than expected, with inflation forecast at just 2.4% by the end of next year, compared to 2.5% previously.
And above all, the famous “dot plots”, these average rate change projections, made individually by FOMC members, show that the Fed could reduce its overnight rates “three times next year”, noted Peter Cardillo.
“The question is when,” the analyst stressed.
For Chris Low, chief economist at FHN Financial, “given the plan to cut rates three times” by a quarter of a percentage point this year, “it makes sense to think that the first rate cut could begin in June “.
Jerome Powell, the president of the institution, acknowledged, while remaining cautious, that the timetable for a possible rate cut was “a subject of discussion” during the Committee meeting.
It was enough to delight investors.
These had already been reinforced by the pace of wholesale prices which slowed down in November, according to the PPI index.
Producer prices thus remained stable.
The increase in prices is zero over one month in November, after they fell by 0.4% in October compared to September, while analysts expected a slight increase in prices, at 0.1%.
Over one year, growth slows, with a price increase of 0.9% compared to 1.2% last month.
On the market, Pfizer laboratories fell 6.75% to $26.65. The group has forecast a decline in its sales in 2024 due to poor demand for anti-Covid 19 vaccines and drugs.
Toy maker Hasbro gained 3.08%. The market considered positive the announcement of a reduction of another 900 positions within two years, a decision which comes a few months after the announcement of a first cut of 15% of its workforce (1,000 employees).
Hasbro posted a net loss of $171 million in the third quarter due to a sharp drop in business in its core business of traditional toys and games.
Tesla, down in the first part of the session due to a major recall on its vehicles, finally finished in the green (+0.96%).
The electric vehicle manufacturer had to recall some two million cars in the United States for an increased risk of collision linked to “autopilot”, its driving assistance system.
The online craft commerce site Etsy lost 1.89% after announcing an 11% reduction in its workforce, or the elimination of 225 jobs.
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