Inflation figures will be decisive in the short term for Wall Street
The New York Stock Exchange resumed its downtrend yesterday after a few rebound sessions. The tighter-than-expected outcome of the midterm elections, the downturn in the crypto market and the disappointing quarterly results for Walt Disney (-13.2%) and a number of growth stocks such as Affirm Holdings (-22.6%) have pushed towards profit-taking.
Market operators have digested the likely split of Congress after the midterm elections, which should lead to a legislative stalemate. This would make it nearly impossible to pass additional tax increases or major spending plans, which was the expected outcome before the election.
The publication on Thursday of US inflation figures for the month of October is now in the center of attention. Consensus calls for a slight slowdown in inflation and core inflation, but it will remain well above what is acceptable to the Fed. That said, Wall Street could bounce back if core inflation comes out in line with expectations and housing component prices ease sharply. Otherwise, Wall Street is likely to react lower.
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