| A trader on the inside floor of the New York Stock Exchange © Reuters=News1 |
The New York Stock Exchange’s leading index, the Standard & Poor’s (S&P) 500, rebounded for the first time in four days.
International oil prices have fallen 27% from their peak almost a week ago, dropping below $100 a barrel.
Producer prices rose less than expected and inflation fears receded a day before a monetary policy decision was made.
◇S&P 500 Dexcross ‘bottom’ signal in 2 years
On the 15th (local time), the Dow recorded 33,544.34, up 599.10 points (1.82%) from the battlefield.
The S&P 500 surged 89.34 points, or 2.14%, to close at 4262.45. It ended the downtrend for three consecutive trading days and succeeded in rebounding.
The Nasdaq Composite rose 367.40 points (2.92%) to close at 12,948.62.
In particular, as the S&P 500 fell 2.4% the day before, along with the Dow and Nasdaq, a ‘desk cross’ occurred, where the short-term moving average fell below the long-term, and it seems that stock market participants interpreted it as a bottom. The S&P 500’s desk cross was the first in two years.
Deskross, meaning the cross of death, refers to a phenomenon in which the line connecting the 50-day average price (moving average) in the stock market falls below the 200-day moving average.
◇Crude oil price fell 27% from its previous high
The Fed’s monetary policy meeting, the Federal Open Market Committee (FOMC) kicked off today, as fears of inflation have subsided and the stock market has revitalized.
First, the price of oil has plummeted by nearly 27% from its recent high, falling below $100 per barrel.
US West Texas Intermediate (WTI) futures for April delivery plunged 6.38% from the previous year to $96.44 a barrel. North Sea Brent crude for May contracted at $99.91 a barrel, up 6.54%. The day before, both WTI and Brent were down more than 5%.
Brent crude is down 27% from nearly a week ago, when it hit $140 a barrel. As the price of oil fell below the psychologically important $100, the stock market formed a kind of relief rally.
Producer inflation also helped the stock market, not worse than expected. Last month, the producer price index (PPI) rose 10% year-on-year, in line with expectations. On a monthly basis, it rose 0.8%, slightly below the 0.9% expected, and significantly lower than the January figure (+1.2%).
Excluding food and energy, which are highly volatile, core PPI rose 0.2% MoM, far less than expected (+0.6%).
◇”100% probability of raising interest rates by 25bp tomorrow”
The interest rate market reflected the probability that the FOMC would raise the base rate by 25 basis points (bp, 1 bp = 0.01%p) from the current zero level (0-0.25%) to almost 100% in the price.
Stock market participants are paying close attention to the FOMC’s new dot plot (interest rate forecast) and growth rate, inflation and unemployment rate forecasts to be released the next day.
As the PPI came out weaker than expected, Fed Chairman Jerome Powell thought a 25bps rate hike was reasonable and the market thought it would change tomorrow, Ken Polkary, a partner at Florida-based investment firm Case Capital Advisors, told Reuters.
“The market was oversold,” he said. “The road ahead is still bumpy, but today is similar to the snap-back rally we once witnessed last week.”
Of the 11 sectors on the S&P 500, 10 rose, excluding energy (-3.72%). The increase was most marked by technology (+3.43%) and consumer discretionary (+3.39%).
When Microsoft (MS) rose 3.9% and Apple rose 3%, the rally of large tech stocks led the rally of the S&P 500 and Nasdaq.
Delta Air Lines jumped 8.7% and United Airlines jumped 9.1% each. This is thanks to the upward revision of the outlook for this quarter.
Home-training company Peloton surged 12%, predicting that Bernstein would outperform the market.
shinkirim@news1.kr
