Nasdaq 100 rebounds despite accelerating core inflation
The New York Stock Exchange started a recovery yesterday after a difficult start to the session marked by higher-than-expected inflation figures, which indicate more persistent inflation and therefore provide no reassurance about the pace of rate hikes.
The consumer price index (CPI) rose twice as much as expected, by 0.4% in September, after rising 0.1% in August, and the core CPI, which excludes food and l energy, rose more than expected by 0.6 % in September after already having increased by 0.6% in August. On an annualized basis, core inflation hit a new high of 6.6% in September, leaving little room for a slowdown in Fed rate hikes. As a result, operators have raised their expectations for monetary policy tightening and now expect two more rate hikes of 75 basis points by the end of the year and a terminal rate of 4.75-5.00% in 2023. from 4.50-4.75% previously.
Nevertheless, this did not prevent the markets from returning for technical reasons. The S&P 500 fell below 3,500 points, marking a 50% retracement of the pandemic rally, before recovering. This rally, which saw the index return above 3,600, was likely helped by hedging of short positions.
The rally was driven by technology stocks, especially semiconductors and Apple (+3.4%). Apple was down 2.9% at its session low and the PHLX semiconductor index fell 4.9% before ending up 3.4% and 2.9%, respectively. Taiwan Semiconductor Manufacturing Co. (+3.9%) was one of the best performers in the sector after posting positive quarterly results and forecasts.
Further supporting the market was strength in the financial services sector (+4.1%), which ended the day at the top of the charts. BlackRock (+6.6%) was one of the sector’s stars after posting mixed results this morning. Another notable leader was JP Morgan Chase (+5.6%), which will report results before Friday’s open.
Daily price chart of Nasdaq 100 (CFD US Tech 100) – key levels