Wall Street closes loosely around balance pending inflation

The New York Stock Exchange, expecting before the US inflation to be published on Wednesday, ended in scattered order around equilibrium on Monday in a calm market where bond yields nevertheless rose a little.

The Dow Jones index fell 0.17% to 33,618.69 points, the tech-dominated Nasdaq edged down 0.18% to 12,256.92 points and the broader S&P 500 index remained stable at 4,138.12 points. (+0.05%).

The start of the week was slowed by the closure of the London market due to celebrations linked to the coronation of Charles III, coupled with a sleepy Parisian market due to a public holiday.

“The market remained in a wait-and-see mode ahead of the US inflation data on Wednesday,” Angelo Kourkafas, investment strategist for Edward Jones, told AFP.

“This is a key point for investors, some of whom are expecting a pause, or even a pivot (change in direction) from the Federal Reserve at some point this year, on interest rates,” he said. he explained.

For Peter Cardillo of Spartan Capital, Wall Street should continue to oscillate in this way not far from equilibrium until the publication of the consumer price index.

The CPI index is due on Wednesday and could have accelerated in April to +0.4% against +0.1% in March, notably due to a rebound in energy prices, according to forecasts from Briefing.com.

On the bond market, yields tightened a little after the publication of the last quarterly survey of the Federal Reserve (Fed) on credit conditions, carried out among banks (SLOOS survey). The rates on two-year bills rose to 4.00% against 3.91% on Friday and those on ten years to 3.51% against 3.43%.

– Tougher loan conditions –

The survey of 84 banks in the United States showed that access to credit was made more difficult in early 2023 and that banks plan to tighten it further this year.

“If the loan conditions become more severe it means that many people will not be able to borrow, it is not very good, obviously”, commented Peter Cardillo.

For Angelo Kourkafas, however, the publication of the survey had little impact on the market because “Fed Chairman Jerome Powell had already mentioned it last week during his press conference”. The survey came out “in line with expectations, it was not a surprise”, he said.

Edward Moya of Oanda pointed out that “the commercial real estate sector would soon experience more difficulties”. “This key survey is likely to support the idea of a possible recession in the third quarter,” added the analyst.

On the stock market, regional banks which suffered last week before recovering on Friday continued to move into positive territory. PacWest advanced 3.65%, Zions Bancorporation 2.10% and Western Alliance 0.59%. “The banking system is well capitalized,” Treasury Secretary Janet Yellen told CNBC after the close.

Among the quarterly results, Disney (+ 2.45%) will announce its own on Wednesday and analysts expect a significant increase in the number of its subscribers to the Disney + streaming service.

US medical equipment maker Baxter International fell 0.96% after announcing the sale of its biopharma subsidiary for $4.25 billion to investors Advent International and Warburg Pincus.

On the economic policy front, the debt ceiling tussle between the Democratic administration and Republicans in Congress will intensify this week. Tuesday President Joe Biden organizes a face-to-face with the leaders of the parliamentary opposition, to try to find a compromise.