15.09.2023: Wall Street making downward retracement after yesterday’s rally (S&P500, USD, CAD, BTC)
The US stock market closed with confident gains yesterday. Today Wall Street is on edge again. The risk-on mood dampened in the New York pre-market.
The benchmark stock indices traded higher in confidence on Thursday. The Dow Jones logged the strongest growth. The index closed 0.96% up with the biggest intraday gain since August 7. The Nasdaq climbed by 0.81%. The S&P 500 rose by 0.84% to close at 4,505.
Futures on the stock indices shed 0.3-0.4% in the New York pre-market. The S&P 500 is expected to trade in the intraday corridor between 4,450 and 4,520.
Yesterday, all significant economic data was much stronger than expected, thus dispelling recession fears. Besides, investors lay hopes for the Fed’s pause in September and November for the simple reason that inflation remains sticky due to a rise in fuel prices.
Retail sales in the US expanded stronger than expected on the back of a surge in sales at gas stations. Initial unemployment claims increased to 220,000 from 217,000 a week ago.
In another report, the producer price index for final demand rose by 0.7% on month in August, beating the forecast of a 0.4% growth. The annual rate of factory inflation accelerated by 1.6%, faster than the expected 1.2% increase.
The data confirmed the likelihood of a soft landing. Nevertheless, judging by the market response, market participants believe that the US Fed will hardly venture into another rate hike.
Additionally, the buzz surrounding AI and related companies significantly boosted risk optimism. The successful IPO of Arm added to the excitement. The company was valued at almost 60 billion dollars during its strong debut on Nasdaq, with the chipmaker’s shares soaring by almost 25% on the first trading day.
US-traded shares of the microchip developer Arm opened at 56.1 dollars apiece, compared to the initial public offering price of 51 dollars, a vote of confidence for other companies planning to list their shares on the stock exchange.
HP shares dropped by 1.8% after Warren Buffet’s Berkshire Hathaway sold about 5.5 million shares of the company, reducing the initial trading losses of 2.5%.
Visa shares declined by more than 2% after the payment processing giant announced it was working with Class B shareholders on a proposal to convert their shares to Class C or Class A.
Moderna’s shares jumped by 3.9% after a European regulatory advisory group recommended authorizing the company’s updated vaccine.
Futures for the S&P 500 and Dow went up on Friday, as investors remained optimistic about a potential pause in US interest rate hikes. However, the early rise closer to the opening of the market was negated by several factors.
Companies producing chip equipment and car manufacturers were under pressure.
Shares of Lam Research and others fell by nearly 2% after a leading global semiconductor manufacturer from Taiwan asked suppliers to delay shipments of high-performance equipment for chip production.
As for automakers, they were hit by a worker strike. Shares of Ford Motor and General Motors dropped by 1.2% and 1.9% respectively after the auto industry workers’ union announced simultaneous strikes at three plants owned by the Detroit Big Three, including Chrysler owner Stellantis.
The auto industry workers’ union began strikes at three plants early Friday morning in parallel, marking the most ambitious union action in the US in decades.
A strike by over 12,000 auto industry workers could slow down the US economic growth if it drags on, even risking the first monthly net decline in wage employment in almost three years.
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08:31 USD | CAD
09:48 BTC | USD