NASDAQ Up Before FOMC
The Nasdaq is up. There was news of a slowdown in the increase in the labor cost inflation rate. The FOMC is expected to raise 25bp tonight. Economic indicators released so far have proven that inflation is clearly slowing. In June, the CPI index is expected to fall in the 2% range.
Nevertheless, the Fed remains cautious because it does not try to stimulate inflation expectations.
This is because the Fed's remarks that it will not raise interest rates in the future are likely to encourage consumer sentiment. So the Fed may not make dovish comments tonight.
This is because the Fed also has a situation.
The rate hike will be over once the FOMC ends in February. However, the stock index's growth rate in January is so steep that it may be a phase to rest.
Nevertheless, the Fed remains cautious because it does not try to stimulate inflation expectations.
This is because the Fed's remarks that it will not raise interest rates in the future are likely to encourage consumer sentiment. So the Fed may not make dovish comments tonight.
This is because the Fed also has a situation.
The rate hike will be over once the FOMC ends in February. However, the stock index's growth rate in January is so steep that it may be a phase to rest.
NASDAQ and DOW Industries Index graphs:
Rebound on Slowing Labor Inflation...Nasdaq 1.67% ↑
With the results of the FOMC, the fighting spirit is revived.
Due to the slowdown in the rise in employment costs and the worsening eurozone economy...
Nasdaq 10.49% in January ↑…the highest since 2001
GM 8.35% ↑..Spotify 12.72%
The New York Stock Exchange closed higher on the 31st (local time) on the first day of the Federal Open Market Committee (FOMC) regular meeting of the Federal Reserve System (Fed).
Investor sentiment revived on the news that the rise in employment costs, including salaries and welfare allowances for U.S. workers, slowed in the fourth quarter of last year.
It is expected that the Fed will serve as a basis for delaying the reinforcement of interest rate hikes.
According to Market Point, the Dow Jones Industrial Average, which collected blue chips on the New York Stock Exchange, recorded 34,086.04, up 1.09% from the previous trading day.
The S&P 500 index, centered on large-cap stocks, also closed at 4076.60, up 1.46% from the previous session. The tech-heavy Nasdaq rose 1.67 percent to 11,584.55.
Employment cost index growth and eurozone economic slowdown ↑
The good news for the stock market was that the increase in the employment cost index (ECI) slowed.
In the fourth quarter of last year, the employment cost index (ECI) rose 1.0% compared to the previous quarter on a seasonally adjusted basis.
The figure is slightly below the 1.2% rise in the previous quarter and the 1.1% rise estimated by the Wall Street Journal (WSJ).
The ECI is an indicator that the Federal Reserve (Fed) is paying attention to, and it is a figure that shows wage increase inflation. Lower employment costs lower wage-led inflationary pressure.
The Fed has maintained that it is too early to "pivot" because the labor market is still hot despite the fall in the consumer price index.
As wage inflation continues in the job market, there is a concern that overall prices will continue to rise.
However, data that the rise in wage hikes is slowing down on the same day is expected to serve as a basis for the Fed to take a breather from the rate hike.
Peter Toz, CEO of Chase Investment Council in Virginia, said, "Labor cost statistics show that what the Fed has done has worked and is turning the corner of raising interest rates."
Data that U.S. housing prices have also been on the decline for five consecutive months also affected the market.
With the results of the FOMC, the fighting spirit is revived.
Due to the slowdown in the rise in employment costs and the worsening eurozone economy...
Nasdaq 10.49% in January ↑…the highest since 2001
GM 8.35% ↑..Spotify 12.72%
The New York Stock Exchange closed higher on the 31st (local time) on the first day of the Federal Open Market Committee (FOMC) regular meeting of the Federal Reserve System (Fed).
Investor sentiment revived on the news that the rise in employment costs, including salaries and welfare allowances for U.S. workers, slowed in the fourth quarter of last year.
It is expected that the Fed will serve as a basis for delaying the reinforcement of interest rate hikes.
According to Market Point, the Dow Jones Industrial Average, which collected blue chips on the New York Stock Exchange, recorded 34,086.04, up 1.09% from the previous trading day.
The S&P 500 index, centered on large-cap stocks, also closed at 4076.60, up 1.46% from the previous session. The tech-heavy Nasdaq rose 1.67 percent to 11,584.55.
Employment cost index growth and eurozone economic slowdown ↑
The good news for the stock market was that the increase in the employment cost index (ECI) slowed.
In the fourth quarter of last year, the employment cost index (ECI) rose 1.0% compared to the previous quarter on a seasonally adjusted basis.
The figure is slightly below the 1.2% rise in the previous quarter and the 1.1% rise estimated by the Wall Street Journal (WSJ).
The ECI is an indicator that the Federal Reserve (Fed) is paying attention to, and it is a figure that shows wage increase inflation. Lower employment costs lower wage-led inflationary pressure.
The Fed has maintained that it is too early to "pivot" because the labor market is still hot despite the fall in the consumer price index.
As wage inflation continues in the job market, there is a concern that overall prices will continue to rise.
However, data that the rise in wage hikes is slowing down on the same day is expected to serve as a basis for the Fed to take a breather from the rate hike.
Peter Toz, CEO of Chase Investment Council in Virginia, said, "Labor cost statistics show that what the Fed has done has worked and is turning the corner of raising interest rates."
Data that U.S. housing prices have also been on the decline for five consecutive months also affected the market.
The seasonally adjusted U.S. housing price index in November last year, compiled by S&P CoreLogic Case-Siller, fell 0.6% from the previous month, falling for the fifth consecutive month.
The news that 19 countries using the euro in the European Union (EU) are clearly slowing down also stimulated investor sentiment.
The news that 19 countries using the euro in the European Union (EU) are clearly slowing down also stimulated investor sentiment.
The more noticeable the economic recession is, the more expectations are that central banks will make an early pivot transition.
Eurostat, an EU statistics organization, announced on the 31st (local time) that the eurozone's fourth-quarter GDP increased 0.1% compared to the previous quarter.
Contrary to market expectations that GDP will grow 0.1% due to the economic slowdown caused by inflation and interest rate hikes, it showed slight growth.
But, with the exception of the Irish economic indicators, which attracted multinational corporations at low tax rates, the eurozone's GDP has virtually grown inversely.
Ireland's GDP increased by 3.5%, but European manufacturing powerhouses such as Germany, Italy, and Sweden all grew backward in the fourth quarter.
Nasdaq's Highest Increase Since 2001 in January...Perhaps the rally is over?
Contrary to the prediction that volatility will be high due to the economic slowdown, stock prices have soared this year. The S&P 500 Index rose 6.18% in January. The Dow and Nasdaq also rose 2.83% and 10.49%, respectively, during the same period.
The S&P 500 Index's January gain was the highest since 2019, and the Nasdaq Composite Index's gain was the highest since 2001.
This result is due to growing expectations that the Fed will take another baby step in March to raise the upper interest rate to 5.0% and effectively end the key rate hike.
However, the Fed is still expected to maintain a hawkish stance at a time when inflation is not easy to converge quickly to the 2% target.
This is due to concerns that slowing inflation could rise again if it signals that it will stop raising interest rates.
Market volatility is expected to expand further if Chairman Jerome Powell takes out "hawk claws" again after the FOMC meeting on the 1st.
U.S. Treasury yields fell. The 10-year interest rate fell about 3bp (1bp = 0.01 percentage point) to 3.52%. The two-year yield, which is sensitive to policy interest rates, fell 5 basis points to 4.207 percent.
International oil prices rose as the dollar weakened ahead of the Fed's rate decision. On the New York Mercantile Exchange, the price of West Texas Intermediate (WTI) for March delivery closed at USD 78.87 per barrel, up 1.25% from the previous session.
Eurostat, an EU statistics organization, announced on the 31st (local time) that the eurozone's fourth-quarter GDP increased 0.1% compared to the previous quarter.
Contrary to market expectations that GDP will grow 0.1% due to the economic slowdown caused by inflation and interest rate hikes, it showed slight growth.
But, with the exception of the Irish economic indicators, which attracted multinational corporations at low tax rates, the eurozone's GDP has virtually grown inversely.
Ireland's GDP increased by 3.5%, but European manufacturing powerhouses such as Germany, Italy, and Sweden all grew backward in the fourth quarter.
Nasdaq's Highest Increase Since 2001 in January...Perhaps the rally is over?
Contrary to the prediction that volatility will be high due to the economic slowdown, stock prices have soared this year. The S&P 500 Index rose 6.18% in January. The Dow and Nasdaq also rose 2.83% and 10.49%, respectively, during the same period.
The S&P 500 Index's January gain was the highest since 2019, and the Nasdaq Composite Index's gain was the highest since 2001.
This result is due to growing expectations that the Fed will take another baby step in March to raise the upper interest rate to 5.0% and effectively end the key rate hike.
However, the Fed is still expected to maintain a hawkish stance at a time when inflation is not easy to converge quickly to the 2% target.
This is due to concerns that slowing inflation could rise again if it signals that it will stop raising interest rates.
Market volatility is expected to expand further if Chairman Jerome Powell takes out "hawk claws" again after the FOMC meeting on the 1st.
U.S. Treasury yields fell. The 10-year interest rate fell about 3bp (1bp = 0.01 percentage point) to 3.52%. The two-year yield, which is sensitive to policy interest rates, fell 5 basis points to 4.207 percent.
International oil prices rose as the dollar weakened ahead of the Fed's rate decision. On the New York Mercantile Exchange, the price of West Texas Intermediate (WTI) for March delivery closed at USD 78.87 per barrel, up 1.25% from the previous session.
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