On the 28th (local time), the major indices of the New York Stock Exchange rose all at once. In the 30 minutes just before closing, low-price buying was concentrated. The sentiment that the stock price has fallen too much this year has dominated the market.
Apple, Visa Card, and Mastercard, which announced good results in the fourth quarter of last year, surged in stock prices, leading the overall market mood.
The leading index, the S&P 500, closed at 4,431.85, up 2.43% from the previous day, the Nasdaq at 13,770.57, up 3.13%, and the Dow, up 1.65% at 34,725.47, respectively.
Shortly after opening, it was bearish. This is due to the expectation that the inflation data released again will give strength to the US central bank’s (Fed) early austerity measures.
The U.S. Department of Commerce reported that the personal consumption expenditure (PCE) price index rose 5.8% in December compared to the same period last year. This is the highest level in about 40 years since 1982. Excluding volatile energy and food prices, core PCE prices rose 4.9%.
Core PCE Core inflation is the Fed’s watch. The Fed’s inflation target is just over 2% based on the PCE Core Price Index.
Wall Street has unanimously predicted 5 to 7 rate hikes within the year.
Bank of America raised its forecast for the Fed’s rate hike this year to seven from the previous four.
JP Morgan raised it from 4 to 5, BNP Paribas from 4 to 6, and Deutsche Bank from 4 to 5, respectively.
“The tug-of-war between the bulls and the bears continues,” said Darrell Cronk, chief investment strategist at Wells Fargo.
However, daily FX senior strategist Christopher Vecchio criticized, saying, “From a historical point of view, investment banks’ predictions of rate hikes were garbage. Investment banks are raising their prospects for interest rate hikes one after another in order to increase the loan-to-deposit margin (the difference between deposit and loan rates).
There was a lot of volatility throughout the day. A concentrated influx of low-price buying just before the close gave relief ahead of the weekend.
Some advise to use the ‘Dog of the Dow’ strategy. The principle quoted in a book published in 1991 by investor Michael O’Higgins is a strategy to select 10 stocks with the highest dividend yield in the previous year and divide them evenly. Choosing 5 high-yielding stocks to invest in is a ‘little dog of the Dow’ strategy.
MarketWatch explains that the gap between the returns of the stocks included in the Dog of the Dow and the general Dow (30 stocks) has grown significantly this year. It was the biggest since 2001.
photo = AP
Today’s ‘Global Market Now’ issues are as follows.
① Apple and Visa that saved the stock market ② Cashwood Why Tesla is buying? ③ Goldman Sachs “Cryptocurrency more classic” ④ Wall Street “5-7 interest rate hikes this year” ⑤ Next week’s Alphabet, jobs, and ECB meeting attention, etc.
More details can be found on Hankyung Global Market YouTube and Hankyung.com broadcasts.
New York = Correspondent Jo Jae-gil road@hankyung.com
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