US stocks were mixed on Friday as stubbornly high inflation and a rebound in rates continued to weigh on investor sentiment.
The recent strong economic/inflation data has pushed Treasury yields back up to a level that makes it very tough for the stock market to stay up at its current level – with a combination of higher yields and lower earnings estimates for 2023, it creates some more renewed headwinds for the stock markets
On Tuesday we have the January consumer price index report
On Friday the Dow Jones Industrial Average rose 129.84 points, or 0.39 per cent to end at 33,826.69. The 30-stock index rallied from lows of the day boosted by shares of Amgen and United Health
The S&P 500 shed 0.28 per cent to end the day at 4,079.09, and the Nasdaq Composite fell 0.58 per cent to close at 11,787.27.
Stocks were mixed for the week. The Dow ended down 0.13 per cent for the week, its third negative week in a row — a first since September. The S&P 500 has shed 0.28 per cent for the week, its second negative week in a row. The Nasdaq rose 0.59 per cent on the week.
Given recent data, economists at Goldman Sachs and Bank of America changed their forecasts this week. They are now predicting that the Fed would raise rates to 5.25 percent to 5.5 percent this year — a quarter point higher than either bank had previously estimated.
And this is playing out in the currency market with US dollar rebounding from a 10-month low as investors push up their forecasts for US interest rates . A recent spate of currency devaluations has highlighted the intense pressure on many emerging economies, as the strength of the US dollar forces them to spend precious foreign reserves to support their exchange rates.
This week, investors will continue to watch earnings season for signs of consumer strength or weakness with Home Depot, Walmart and Etsy are scheduled to report.
Across the sectors, Energy was the biggest laggard with Devon Energy dropping 4.29 per cent.
Futures
The SPI futures are pointing to a flat start.
Currency
One Australian dollar at 7:40 AM has weakened compared to the US dollar yesterday buying 68.66 US cents (Fri: 68.77 US cents).
Commodities
Iron ore futures are pointing to a 0.05 per cent gain.
Gold lost 0.1 per cent. Silver shed 0.1 per cent. Copper fell 0.4 per cent and oil dropped 2.7 per cent.
Figures around the globe
Across the Atlantic, European markets closed lower. London’s FTSE fell 0.1 per cent, Frankfurt lost 0.3 per cent while Paris closed 0.3 per cent lower..
In Asian markets, Tokyo’s Nikkei fell 0.7 per cent, Hong Kong’s Hang Seng lost 1.3 per cent while China’s Shanghai Composite closed 0.8 per cent lower.
On Friday, the Australian sharemarket closed 0.9 per cent lower at 7,347.
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
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