Forex Analysis & Reviews: 16.07.2022 - US stocks showed mainly a...

16.07.2022 05:57 AM

US stocks showed mainly a fall (by 0.3-0.5%)

US stocks showed mainly a fall of 0.3-0.5%, although during the trading session the indicators fell much more strongly - up to 2%. As a result, the decrease in the broad S&P 500 indicator was the smallest and amounted to 0.3%, and the industrial indicator The Dow Jones Industrial Average - 0.46. Technological NASDAQ Composite managed to slightly strengthen its positions (by 0.03%).

The main reason for the decline in stock indicators and the anxiety of investors, of course, is the release of the latest statistics on inflation in the country, which reached 9.1% last month. This figure was a record for the last 40 years and exceeded the forecasts of experts.

At the moment, more than 80% of experts believe that the US central bank will decide at the next meeting this month to raise the interest rate by 100 points at once, to 2.5-2.75% per annum. Previously, analysts were inclined to believe that the rate will be increased by 75 basis points - the same as in June.

However, judging by the comments of the Federal Reserve representatives, the central bank is not yet considering raising the rate by 100 points at once. Most likely, the rate will be increased by 75 points, as previously planned. Tougher measures will have to be resorted to if new statistical data come in, indicating that the economy cannot cope with rising prices.

Another factor of concern for investors is the release of statistical data on employment. So, over the past week, the number of applications for unemployment benefits in the United States increased by 9,000 and reached 244,000. This exceeded the forecasts of experts who predicted that this figure would remain at the same level of 235,000.

Preliminary information from the University of Michigan on the calculation of the consumer confidence indicator for the current month was published on Friday. Last month it dropped to a low of 50 points. Also, this institution calculates the level of inflation expectations of the US population. This figure was 5.3% in June for the current year and 3.1% for the next five years. If it turns out to be higher in July, it is likely that the US central bank will be inclined to raise the rate by 100 rather than 75 basis points.

Statistical data were released on Thursday, which showed an increase in the dynamics of producer price growth to 11.3% last month on an annualized basis from the May level of 10.9%. At the same time, this indicator reached its record highs in March of this year (11.6%).

Also, JPMorgan Chase & Co. and Morgan Stanley released their quarterly reports on Thursday. They turned out to be not very satisfactory, which was facilitated by a number of reasons: the rapid growth of inflation, the decline in consumer confidence, the uncertainty about the future increase in the interest rate, etc.

Thus, JPMorgan Chase, which is the largest US bank, showed a decrease in net profit, which turned out to be higher than experts' expectations. The company also announced the suspension of its share repurchase program, resulting in a 3.5% drop in the value of its shares.

The second major bank, Morgan Stanley, also posted lower-than-expected results last quarter, sending its stock price down 0.4%.

As a result of Conagra Brands' net profit almost halving in the last quarter of the last fiscal year and earnings below market expectations, the value of its securities fell by 7.3%.

Following a downgrade by JPMorgan analysts of Cisco Systems Inc. and reducing the forecast share price to $51 from $62, the quotes of its securities decreased by 0.9%.

At the same time, the value of Tesla Inc. increased by 0.5%. Before that, information appeared that Andrei Karpaty had left the post of director of the artificial intelligence department.

Citigroup Inc. and Wells Fargo & Co's quarterly reports were released on Friday.

According to experts' forecasts, the total profit of companies included in the calculation of the S&P 500 indicator for the last quarter increased by only 4.3%. This is the lowest for the last year and a half.

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*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.