The New York Stock Exchange closed higher on Monday as some investors expected an easing of monetary policy from the US Federal Reserve (Fed) after the release of several macroeconomic indicators that were deemed disappointing.
The Dow Jones was up 0.45% to 33,912.44, the tech-heavy Nasdaq was up 0.62% to 13,128.05 and the broader Nasdaq was up 0.60% to 4297.14.
First, Wall Street opened lower after a string of poor macro numbers.
In China, industrial production and retail sales slowed in June, while investment slowed in July.
Added to this was the decline in the manufacturing activity index for the New York region, which fell sharply to -31.3 in August, while economists were expecting a rise of 5 points.
But as the CPI price index recorded weaker-than-expected last Wednesday, investors found hope in these ominous pictures of the global economy.
“The Fed will stop (raising interest rates) sooner if inflation slows, and it’s more likely to slow down if the global economy falters,” said Chris Low of FHN Financial.
The hypothesis that a Fed will raise its policy rate by no more than one point in total over the last three meetings of the year wins under the CME Stock Exchange model, while sticking with two consecutive hikes of 0.75 percentage points each.
“It looks like the market is believing in a scenario that we don’t know about yet,” commented Nick Reece of Merk Investments. “In the past week he has shown incredible resilience and a will to keep moving up.”
The ratio of investors who think the rise will continue to those who believe it will fall has hit its highest level since mid-January.
“What has worked since June, which is to revert to the riskiest companies, especially tech, will not work for long,” Regent Atlantic’s Andy Kapyrin nonetheless warned. “They are no longer being discounted and there are still a lot of risks on the horizon.”
Defensive, i.e. less economically sensitive stocks such as Coca-Cola (+1.26%), McDonald’s (+1.24%) and the cable network operator Comcast (+1.42%) shone.
After enjoying scalded investor favor early in the session, the bond market gave back much of its gains. The US 10-year Treasury yield, which moves inversely with bond prices, edged down to 2.79% from 2.83% on Friday.
The meeting was prompted by the announcement of an investment company Third Point’s stake in Disney’s capital, which, according to a source familiar with the matter, is close to $1 billion (+2.21% to $124.26).
If the fund validates the group’s current strategy, it will make several proposals, including a split with sports media group ESPN.
Morgan Stanley acquired around 400,000 Revlon shares, which rose 30.64% to $8.57 on Monday. Since filing for bankruptcy in mid-June, the cosmetics group has been one of the favorites of vans.
The Moderna lab, which took a beating last week, rebounded (+3.27% to $176.78) on Monday, helped by regulator British Medicine’s marketing approval of its new anti-Covid vaccine, the Omicron variant.
The final passage of the climate and health plan in the US Congress on Friday has brought some companies to benefit from investments in renewable energy and other household endowment bonuses.
Announced as the big winner of this text among electric vehicle manufacturers, Tesla has gained height (+3.10% to $927.96).
Oil stocks, whether it be ExxonMobil (-1.79%) or Chevron (-1.90%), were weighed down by the prospect of weaker demand amid economic conditions and the collapse in the price of black gold on Monday.