Wall Street made an impressive turnaround on Thursday. First, inflation data cause a moment of shock and new annual lows. But as soon as the first shock was digested, the US stock exchanges began to rally.
The prospect of a sustained rate hike by the Fed only sent Wall Street down briefly on Thursday. The US standard value index Dow Jones quickly turned positive and closed 2.8 percent higher at 30,038 points. The tech-heavy Nasdaq advanced 2.2 percent to 10,649 points. The broad S
The initial sell-off was a bit overdone, said Shawn Cruz, chief investment strategist at brokerage firm TD Ameritrade. He thinks it's a good sign that there are no follow-up sales. However, Craig Erlam, market analyst at brokerage house Oanda, warned against declaring a trend reversal. "This is really not an inflation report you want to see."
US inflation fell less than expected in September. At the same time, the core rate, which excludes the strongly fluctuating food and energy prices, rose. "After this inflation data there is probably no one left who believes the Fed can raise interest rates by less than 0.75 percentage point at their November meeting," said Seema Shah, chief investment strategist at money manager Principal Global. Should the price pressure remain so high, the fifth step of this magnitude in a row must be expected in December.
On the commodity market, investors parted from gold. The precious metal fell 0.4 percent to $1,665 per troy ounce (31.1 grams). With rising interest rates, bonds would become an ever greater competitor for investors looking for safe investments, said stockbrokers. In the wake of the drop in gold prices, precious metal promoters lost their shine. Barrick, Newmont and Gold Fields stocks fell as much as 2.6 percent.
TD analyst Cruz cited encouraging numbers from Domino's Pizza and Walgreens Boots Alliance as another reason for Wall Street's recovery. They are a good omen for consumption in the USA. US consumer spending is seen as the mainstay of the world's largest economy. Domino's increased its quarterly sales more than expected. The profit also surprised positively, praised analyst Sean Dunlop from the research house Morningstar.
On the other hand, the renewed decline in the profit margin is disappointing. The shares of the pizza service still jumped more than ten percent. The drugstore chain Walgreens also presented a quarterly result above market expectations. The company reportedly made earnings of $0.80 per share. For the full year, it is targeting a surplus of $4.45 to $4.65 per share.
This outlook is "significantly better than feared," commented analyst Elizabeth Anderson from the investment bank Evercore ISI. Walgreens stocks rose more than 5 percent.
