Forex Analysis & Reviews: 08.08.2023 - Wall Street on the Rise:...

08.08.2023 04:56 AM

Wall Street on the Rise: Awaiting Key Inflation Report

What's behind this rise? After a bit of anxious waiting, investors are getting back to business, preparing for the release of a key inflation report in the U.S. this week. This event has sparked significant interest, especially after last week ended with a decline in major indices and investors were eager to lock in their gains.

2023 is proving to be a real boom for U.S. stocks. The primary driver? Optimism surrounding artificial intelligence technology and faith in the steady growth of the global economy. The S&P 500 has soared an impressive 17.7% this year.

And while summer typically brings a certain lull in the market due to vacation season, August remains a month to watch. All eyes are now on Thursday: the U.S. consumer price report will provide much insight into the future course of the Federal Reserve. Recent employment news has made many cautious, suggesting that the Fed might keep rates high for much longer.

An interesting twist: John Williams of the New York Fed hinted at a potential rate cut in 2024, while Governor Michelle Bowman believes there needs to be another hike to achieve the desired 2% inflation.

The Dow Jones Industrial Average (.DJI) rose by 407.51 points (1.16%), reaching 35,473.13 points. This marks the largest single-day increase since June 15th of the current year. The S&P 500 (.SPX) showed a similar growth, increasing by 40.41 points (0.90%) to 4,518.44. The Nasdaq Composite (.IXIC) also advanced, climbing by 85.16 points (0.61%) to close the day at 13,994.40.

The tech-heavy Nasdaq managed to break a negative streak of four sessions. This has been the longest downward period for the year so far. It's worth noting that Tesla shares dropped 0.9% following the appointment of Vaibhav Taneja as the company's Chief Financial Officer, replacing Zach Kirkhorn.

Nasdaq had previously seen a decline for four consecutive days in May, and prior to that, the longest negative stretch was six sessions in October. The S&P 500 also recorded losses in four sessions in 2023, with similar streaks occurring in May and February. In December, the index lost ground in five consecutive sessions.

Overall, the main S&P indexes showed growth, particularly in communication services (.SPLRCL) by 1.9% and financial services (.SPSY) by 1.4%.

According to Refinitiv, second-quarter profits exceeded analysts' expectations for 79.1% of the 422 S&P 500 companies that have already reported. Berkshire Hathaway shares surged by 3.4%, reaching a record high after the company reported a quarterly profit of over $10 billion.

However, Tyson Foods shares dropped 3.8% due to third-quarter revenue failing to meet expectations. Vaccine manufacturers BioNTech SE and Moderna Inc also saw their shares decrease by 7.5% and 6.5% respectively.

BioNTech SE slashed its drug development budget due to a decrease in quarterly revenue, stemming from reduced demand brought on by the pandemic. Additionally, the investment bank Leerink revised downward its target price for Moderna Inc's shares.

Sage Therapeutics' (SAGE.O) stocks saw a sharp decline of 53.6%, marking the largest drop since December 2019. This happened after the U.S. drug regulator rejected their application for a postpartum depression treatment. Meanwhile, shares of their partner, Biogen (BIIB.O), rose by 0.9%.

Trading volume on U.S. exchanges amounted to 9.92 billion shares, which is below the 20-day average of 10.86 billion. Within the S&P 500 index, 19 new 52-week highs and eight lows were registered. As for the Nasdaq Composite, the number of new highs reached 71, with lows at 169.

The CBOE Volatility Index, based on option trading for the S&P 500, decreased by 7.78%, settling at 15.77.

On the commodities market, the December delivery gold futures fell by 0.26% to $1.00 per troy ounce. WTI and Brent oil futures also showed a slight decline, reaching $82.52 and $85.86 per barrel respectively.

On the foreign exchange market, the EUR/USD pair showed a minor change, settling at 1.10 (a 0.09% change), while the USD/JPY increased by 0.53% to 142.50. The U.S. dollar futures rose by 0.07%, settling at 101.90.

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*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.