Minor declines on Wall Street. Investors’ attention is focused on the quarterly results of the largest banks

Luc Williams

The Dow Jones Industrial dropped 0.62% at the close. and amounted to 37,361.12 points. The S&P 500 fell by 0.37% at the end of the day. and amounted to 4,765.98 points. The Nasdaq Composite fell 0.19%. and closed the session at 14,944.35 points. The Russell 2000 small-cap index fell 1.33 percent to 1,925.02 points. The VIX volatility index increased by 4.30 percent, to 13.82 points.

“By every measure, U.S. stock returns are higher”

All factors indicate that it is worth overweighting US stocks in an individual investment portfolio over securities of other classes and from other countries, wrote the Goldman Sachs Investment Strategy Group report. “Our strategic allocation to US equities is 74%. total public equity exposure in a moderate-risk portfolio for taxable and tax-exempt clients. We overweight U.S. equities by 11 percentage points over the MSCI All Country World Index,” the report on investment strategies for 2024 said. “By every measure, U.S. stock returns are higher compared to non-U.S. stocks, bonds and cash. Nevertheless, we continue to recommend that our clients invest within a strategic asset allocation for US equities tailored to their individual goals,” it added.

According to Goldman Sachs analysts, this attitude results from many factors. “Non-US stocks are not as cheap as they seem. Differences in valuations between countries and regions are not a good predictor of better or worse market performance. Earnings per share in the U.S. have grown and will continue to grow at a faster rate than in most other markets. US stocks are less exposed to an economic slowdown in China,” the publication said.

The New York State Manufacturing Activity Index (Empire Manufacturing) dropped to -43.7 points in January. with -14.5 points a month earlier. Analysts expected the index to be -5 points.

Money markets are pricing in the likelihood of an interest rate cut for March. in the US by 25 bp. at 70 percent In the euro zone, futures indicate 25%. chances of reducing interest rates. in March. The next meeting of the US Federal Reserve is scheduled for January 30-31. “Rates will probably be cut, but not as early as markets are currently pricing in. In our view, inflation will decline to target values ​​over the course of the year, but in an irregular manner,” said Guy Miller, chief market strategist and economist at Zurich Insurance Group.

The president of the French central bank, Francois Villeroy de Galhau, said on Tuesday that the ECB’s next move would be to cut interest rates, but the timing of its implementation remains an open question. In turn, the president of the Central Bank of Portugal, Mario Centeno, said that inflation in the euro zone is heading in the right direction.

“We are back to the optimism we had last year”

Member of the ECB Governing Council, Robert Holzmann, indicated on Monday that interest rate cuts this year are not certain due to persistent inflation and geopolitical risk. “We are back to the optimism we had last year, when we saw a cooling of inflation, a soft landing of the economy and a shift towards interest rate cuts. If that’s the case, that’s fine. However, if something that does not fit this scenario happens, i.e. either more persistent inflation or a hard landing of the economy, then it would seem logical to expect equity market volatility in the future,” said Russ Mold, chief investment officer at AJ Bell.

Investors are analyzing company results for the fourth quarter of 2023.

Morgan Stanley’s stock fell more than 4 percent. despite better than expected results. The bank’s net revenues amounted to USD 12.90 billion vs. market consensus of USD 12.79 billion. Goldman Sachs shares rose almost 1%. The bank’s earnings per share in the fourth quarter amounted to USD 5.48. The market expected $3.80.

Tesla shares rose 0.5% at the end of the day. despite previous declines. The company’s CEO, Elon Musk, said on Monday that he wants to take about 25%. shares in an electric vehicle manufacturer. Musk currently owns 13%. Tesla shares, which translates into 411 million shares. In 2022, the billionaire sold billions of dollars worth of his stake in the company, largely to finance a $44 billion leveraged acquisition of social media platform Twitter.

“The question is, are we satisfied that profits will grow enough to meet expectations? We’ve seen over the last year that many of these highly valued companies can start to fall very quickly if they don’t meet expectations,” said Georgina Cooper, global equity portfolio manager at Newton Investment Management.

February WTI futures are trading at $71.94 a barrel, down 1.06%, and March Brent futures are down 0.44%. up to USD 77.81/b.


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