Inflation fears fluctuate for technology companies and the broader market
US Equity Futures Monday’s tech-driven selloff was followed by lower trading early Wednesday, while the friction of supply and demand pushed energy prices to multi-highs.
On Wall Street, the S&P 500 rose 1.1% to 4,345.72. The Dow Jones Industrial Average rose 0.9% to 34,314.67 and the Nasdaq rose 1.3% to 14,433.83. Shares of smaller companies also rose. The Russell 2000 Index rose 0.5% to 2,228.36.
The gains marked a reversal in the overall trajectory of the market in recent weeks. The S&P 500 fell 4.8% in September, its first monthly decline since January. After steadily losing ground since setting an all-time high on September 2, the index fell below its 100-day moving average of 4,354 on Tuesday.
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The market has been choppy for weeks, with an up and down shift from inflation concerns for technology companies and the broader market.
Rising inflation is prompting businesses from Nike to Sherwin-Williams to lower sales forecasts and warn investors that higher costs will hurt financial results. Supply chain disruptions and delays, along with rising raw material costs, are some of the major problems facing companies as they try to recover from the impact of the pandemic.
The pandemic and global supply chain problems prompted the International Monetary Fund to lower its forecast for global growth this year.
Nevertheless, Wall Street is still expecting solid corporate profit growth when third-quarter earnings season kicks off later this month. According to FactSet, S&P 500 companies are projected to increase earnings by 27.7% in the year-ago quarter compared to the July-September quarter.
Facebook rose 2.1% on Monday after a former employee told “60 Minutes” that the company has consistently chosen its interests over the public good. Former employee Frances Haugen testified before Congress on Tuesday.
Meanwhile, Asian shares slipped into cautious trading on Wednesday, trailing a rally on Wall Street led by technology companies and banks, which erased most of the losses from the previous day’s selloff.
Japan’s benchmark Nikkei 225 fell 1.3% to 27,470.09 in afternoon trade. South Korea’s Kospi fell 1.4% to 2,919.87. Australia’s S&P/ASX 200 closed 0.6% down at 7,206.50. Hong Kong’s Hang Seng was little changed at 24,093.07, down less than 0.1%. Business in Shanghai was closed due to Chinese national holidays.
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Concerns about ongoing coronavirus infections in Asia remain, although there are growing hopes that economic activity will return to near normal later this year, having bounced back from a deep recession in 2020.
Tan Boon Heng of the Asia and Oceania Treasury Department at Mizuho Bank said, “On the risk front, China’s credit problems and the risk of contagion have certainly not subsided as developer concerns are still emerging. As such, Caution has not been taken.” Singapore.
Troubled real estate developer China Evergrande Group’s risk of defaulting on more than $300 billion of its debt has investors already worried about a slowdown in China’s growth.
Shares fell after Japanese Prime Minister Fumio Kishida took office on Monday. Kishida has indicated he may favor a capital gains tax to improve government finances.
The prospects for the world’s third largest economy remain uncertain. The Fitch agency maintained a “negative outlook” for Japan, citing “the downside risks to the macroeconomic and fiscal outlook from the coronavirus shock”.
Shares in New Zealand fell after its central bank raised interest rates for the first time in more than seven years, giving it some support when the coronavirus pandemic began.
The Reserve Bank raised the benchmark rate to 0.5% from a record 0.25%. This step has been taken despite the lockdown in Auckland due to the outbreak of Coronavirus.
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The bank said inflation was expected to rise to 4% in the short term before reducing to 2% in the medium term.
Benchmark US crude in energy trading rose 8 cents to $79.01 a barrel in electronic trading on the New York Mercantile Exchange. On Tuesday, it rose $1.31 to $78.93 a barrel.
Internationally, Brent crude rose 9 cents to $82.65 a barrel.
In currency trading, the US dollar rose from 111.45 yen to 111.75 Japanese yen. The Euro is priced at $1.1588, which is less than $1.1601.