Optimism after positive inflation numbers on Wall Street: the Nasdaq Index is rising significantly

On Wednesday, investors received a conclusion to the price increase in June. It turned out that it amounted to 3 percent on an annual basis, while the figures showed that core inflation reached 4.8 percent last month.

Thus there is a marked decrease from May, when headline and core inflation were respectively four and 5.3 percent year on year. It created a good atmosphere among investors, who sent the three major indices right from the start.

Economics professor Betsy Stephenson says CNBC That lowering inflation requires patience.

– We see the number come down. Stevenson says the US central bank should give the economy some time for interest rate increases to work.

From the report, it also appears that pressure on the labor market is decreasing.

– This is exactly what a soft landing looks like. She adds that the labor market is not collapsing, but is declining and the same trend is with inflation.

Rising on Wall Street

When Wall Street opened, there was great optimism among investors. From the beginning, the shares were pointing higher, and this continued throughout the trading day.

At the end of the trading day, the three main indicators looked like this:

• The Dow Jones Industrial Average, which consists of 30 handpicked stocks believed to be important, rose 0.2 percent.
• The Nasdaq Composite Index, which was dominated by technology stocks, rose 1.1 percent
• The Standard & Poor’s 500 Collective Index, which consists of 500 of the largest listed companies, rose 0.7 percent.

All three indicators have been positive this week so far. For the Nasdaq technology index, the day ended at the highest level since April 2022.

Big banks are burning

On Thursday, the Producer Price Index for June will be presented – an important indicator of how industry is doing in the world’s largest economy.

Towards the end of the week, several major banks will be on fire. JP Morgan, Citigroup and Wells Fargo will publish their results for the second quarter – and then investors will see how the profit margins of companies that went through a banking crisis at the beginning of the quarter turned out.

During the trading day, all three companies rose. JPMorgan rose 0.5%, Citigroup rose 1.8%, and Wells Fargo rose 1.2%.

Wednesday’s inflation numbers came just two weeks before the Federal Reserve delivers its next interest rate decision, in which a 0.25 percentage point increase is almost fully priced in. The main interest rate in the United States is currently between five and 5.25 percent.

The two-year and ten-year interest rates fell significantly after the inflation figures were published.

Since headline inflation peaked at just over nine percent last summer, there has been a steady decline in consumer prices, causing the market to price in interest rate cuts in the US ahead of any of the other major central banks. At the time of writing, the market believes that will happen in June next year.