Moderate growth on Wall Street. Quarterly results of American companies in focus

Luc Williams

The Dow Jones Industrial was up 0.37% at the close. and amounted to 38,521.36 points. The S&P 500 increased by 0.23% at the end of the day. and amounted to 4,954.23 points. The Nasdaq Composite rose 0.23%. and closed the session at 15,609.00 points. The Russell 2000 small-cap index rose 0.74 percent to 1,951.61 points. The VIX volatility index fell by 4.32%, to 13.08 points.

The market is trying to get heads and tails out of Powell’s statement

“The market is trying to get heads and tails out of Powell’s statement and the latest results,” said Adam Sarhan, CEO of 50 Park Investment, referring to Fed Chair Jerome Powell’s recent comments that dashed hopes for a March cut.

According to Mathieu Racheter, head of equity strategy at Julius Baer, ​​recent results and a strong outlook have raised earnings assumptions, keeping valuations of large-cap technology stocks buoyant. “While valuations are no longer low, they are not excessive either – we only see downside risk in Tesla and Apple’s valuation multiples. We recommend sticking with the winners, preferring Alphabet, Amazon, Meta, Microsoft and Nvidia,” Racheter wrote in the report.

UBS analysts predict a decline in the yield of 10-year US treasury bonds to 3.5%. until June 2024; they also predict a slowdown in the American economy. Currently, bond yields exceed 4.1%. In such an environment, they still prefer quality bonds and stocks.

Investors should still take into account market volatility

However, UBS analysts believe that investors should still take into account market volatility, taking into account potential macroeconomic risks. “We continue to believe that the U.S. economy will slow and inflation will decline this year, which will send a positive signal for quality bonds and stocks,” UBS said in a Feb. 6 report.

In recent days, further statements by Fed members have appeared, from which investors are trying to read when the Federal Reserve will start cutting interest rates. Expectations of rapidly approaching cuts, combined with high profits for tech giants, have driven the market higher in recent weeks. But recent comments from Federal Reserve Chairman Jerome Powell dashed hopes for a March rate cut and indicated that cuts could come much later than previously expected. Fed Chairman Jerome Powell reiterated that more good data is needed to confirm that inflation is falling, so a rate cut in March is unlikely.

On Monday, the president of the Chicago Fed, Austan Goolsbee, assessed that economic data were on the right path and suggested that the American economy was heading towards normalization. He did not rule out a reduction in interest rates. in March, but stressed that inflation must continue to show signs of weakening. Minneapolis Fed President Neel Kashkari estimates that the Fed has time to decide on a change in rates, taking into account the possibility that “the neutral interest rate has increased.” due to a rapid decline in inflation and a growth-resistant economy.

Optimism on stock exchanges in China

Eli Lilly shares fell less than 1%, although they gained on the day after the company reported better-than-expected quarterly results. Palantir Technologies increased over 30%. after the data analytics firm forecast annual profit above Wall Street analysts’ estimates. FMC Corp fell more than 11%. following forecasts for weaker-than-expected first-quarter profit as the plant protection supplier anticipates lower sales volumes as stocks deplete. Spotify shares gained almost 4%. Operating income forecasts for the first quarter were higher than expected.

Shares of Chinese companies listed on US stock exchanges, such as Li Auto Bilibili and Tencent Music, rose several percent each on optimism on stock exchanges in mainland China, based on a number of signals that the authorities are strengthening their determination to support the situation on financial markets.

Chipmaker NXP Semiconductors gained 1 percent. following better-than-expected fourth-quarter results. NXP reported adjusted earnings per share of $3.71, 8 cents above estimates from analysts surveyed by LSEG. Chegg shares fell 6%. after first-quarter revenue guidance fell short of expectations. On the oil market, WTI futures for March are priced at USD 73.50 per barrel, up 0.99%, and April Brent futures are up 0.91%. up to USD 78.71/b.


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