The 4th quarter of the year brings with it close monitoring of companies' earnings. Fortunately, 3M, Johnson & Johnson and GE have all managed to surpass expected earnings.
Yesterday was a day of ups and downs as traders waited for Friday's important PCE data and the beginning of the US corporate earnings season.
Markets initially fell following the better S&P Global PMI, particularly in the services sector. The sharp deterioration in the ISM services index published a few days ago raised some concerns about a hard landing, which would translate into smaller Fed increases and boost stock markets. Therefore, yesterday's positive data had the opposite effect, albeit short-lived.
Shortly after, the Richmond Fed's manufacturing index fell more than expected, resulting in a recovery in stock markets. Similar price movements have been observed in the forex market, stocks and commodities.
Volatility is a sign that the market isn't stable, so investors don't know how to react to the chaos. On the one hand, they are hopeful for the benefits of lowered interest rate hikes but also worry about the economy's vulnerability.
In addition to what has already been said, US stock indices started lower on Tuesday because 3M, Johnson & Johnson and GE, leaders in their industries, beat earnings expectations but warned of a rough year ahead.
The fourth quarter earnings season is closely watched, as companies are expected to experience the full impact of the Federal Reserve's rate hike campaign. The central bank is widely expected to raise interest rates by another quarter of a percentage point next week.
The smallest rise since the implementation of restrictive monetary policy is, in principle, considered positive for technology companies. Particularly for those with the largest capitalization, who announce their results these days and who will largely set the course of the market.
In the commodities market, the performance of oil is highlighted.
After the rally that began at the start of the year and drove WTI oil from $72.5 to $82.5, an increase of $10, it has experienced a significant retracement that, according to technical analysis, points to the bottom of the range it has been in since the end of November.
Sources: Bloomberg, Reuters