Wall Street buoyed by easing inflation concerns ahead of Fed decision

  • McDonald’s warns of short-term cost pressures
  • US labor cost growth slowed in the fourth quarter
  • The Fed’s interest rate decision on Wednesday
  • GM rises on strong forecast, Caterpillar hit by low Q4 profit
  • Indexes rose: Nasdaq 0.48%, S&P 0.33%, Dow 0.07%

Jan 31 (Reuters) – Wall Street rose on Tuesday as data on wage growth suggested the Federal Reserve’s aggressive approach to reducing inflation held ahead of cuts. -decision of the central bank, while the gains of the Dow are limited to the revision of the income.

US labor costs rose at their fastest pace in a year in the fourth quarter as wage growth slowed, bolstering expectations the Fed is slowing interest rate hikes.

The Fed will decide on rates on Wednesday, with traders betting on a 25-basis-point (bps) hike at the end of the two-day meeting, and the terminal rate at 4.9% in June.

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“When the Fed starts its meeting today, they will look at all the indexes that might give them a better judgment on inflation and this is one of them,” said Peter Cardillo, head of the economy at Spartan Capital Securities LLC.

“Labor costs are still high, but that means prices have come down, and that’s a big factor in wage growth going forward.”

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Ten of the 11 major S&P 500 indexes rose 0.9% after an 8.2% gain in General Motors Co ( GM.N ).

The auto association predicts stronger-than-expected revenue for 2023 and says it will reduce costs by $2 billion.

United Parcel Service (UPS.N) jumped 4% on strong quarterly earnings, outperforming the Dow Jones Transport Average (.DJT).

Limiting gains in the blue-chip Dow Jones Industrial Average (.DJI) was Caterpillar Inc (CAT.N), which fell 5.3% after reporting a quarterly profit decline in manufacturing costs. higher.

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McDonald’s Corp ( MCD.N ) fell 1.9% on warnings of short-term inflation pressures, while Pfizer Inc ( PFE.N ) fell 0.3% after missing earnings forecasts. drug manufacturers for a full year for the COVID-19 product was unexpected.

“With additional earnings coming this week, participants are a little concerned that the market has gotten ahead of itself and are therefore a little cautious about the Fed meeting,” said Robert Pavlik, senior portfolio manager at Dakota Wealth.

At 10:13 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 23.71 points, or 0.07%, at 33,740.80, the S&P 500 (.SPX) was up 13.30 points, or 0.33%, at 4,031.07, and the Nasdaq Composite (.IXIC) rose 54.94 points, or 0.48%, to 11,448.75.

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Wall Street started the year on a strong footing and is set to end January higher, with the Nasdaq (.IXIC) rising more than 9% as investor interest in the growth.

Expectations of Fed policy easing eased concerns about valuations of technology and other high-yield stocks.

165 S&P 500 companies reported fourth-quarter earnings. Revenue is expected to fall 2.4% for the quarter, compared with a 3% decline expected a day earlier, according to Refinitiv data.

Advances outnumbered decliners by a 2.14-to-1 ratio on the NYSE and a 2.23-to-1 ratio on the Nasdaq.

The S&P index recorded 52 new four-week highs and no new lows, while the Nasdaq recorded 32 new highs and 14 new lows.

Reporting by Johann M Cherian and Shreyashi Sanyal in Bengaluru Editing by Vinay Dwivedi, Saumyadeb Chakrabarty and Sriraj Kalluvila

Our Standards: The Thomson Reuters Trust Principles.

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