In a reversal of fortunes, Wall Street rebounded from the significant losses experienced the previous day, marking a notable shift since the rally commenced in late October. Early trading saw the S&P 500 rise by 0.7%, with the Dow gaining 219 points after a brief downturn following five consecutive record-setting days. The Nasdaq composite also climbed by 1%. Micron Technology contributed to the market’s positive momentum, reporting stronger-than-expected results and experiencing substantial gains. Meanwhile, Treasury yields decreased in response to mixed economic reports, with declining yields playing a pivotal role in propelling stocks to recent highs.
Global markets, however, faced headwinds on Thursday, as Wall Street paused its robust rally due to disappointing corporate profit reports and concerns about the market’s rapid ascent. Germany’s DAX and Paris’ CAC40 both declined by 0.3%, while Britain’s FTSE 100 edged 0.1% lower.
Futures indicated a positive outlook for the S&P 500, rising by 0.5%, and the Dow Jones Industrial Average, up by 0.4%. In Asian markets, Tokyo’s Nikkei 225 index fell by 1.6%, primarily driven by a 4% decline in Toyota shares. The automaker announced a recall of 1 million vehicles due to a potential airbag deployment defect, exacerbating concerns. Australia’s S&P/ASX 200 slipped by 0.5%, and South Korea’s Kospi shed 0.6%. Hong Kong’s Hang Seng and the Shanghai Composite showed modest gains and losses, respectively.
Despite Wednesday’s widespread losses on Wall Street, global markets remained on edge. The S&P 500 experienced its most significant decline since the start of the late October rally, dropping 1.5% to 4,698.35. The Dow Jones Industrial Average and the Nasdaq composite also registered losses.
FedEx contributed to market challenges, plunging by 12.1% after reporting weaker-than-expected revenue and profit for the latest quarter. The company revised its full fiscal year revenue outlook downward due to demand pressures.
Amid these challenges, reports suggested that the U.S. economy may be more resilient than anticipated. Consumer confidence in December and sales of previously occupied homes in November exceeded economists’ expectations. Globally, signs of easing inflation were evident, with the United Kingdom reporting a lower-than-expected inflation rate of 3.9% in November.
The prospect of cooling inflation globally raised hopes that central banks might reconsider their aggressive interest rate hike campaigns in 2024. The Federal Reserve, in particular, is expected to lower its main interest rate by at least 1.50 percentage points in 2024 from its current range of 5.25% to 5.50%, the highest level in over two decades.
Treasury yields, reflecting these expectations, have been declining since late October, with a further dip following the U.K. inflation report. The yield on the 10-year Treasury inched up to 3.86% from 3.85% late Wednesday.
In other market developments, U.S. benchmark crude oil and Brent crude showed marginal gains in electronic trading, while the U.S. dollar experienced slight declines against the Japanese yen and the euro.
Featured Image: Unsplash
