Following the inflation data: sharp increases in the US, bank stocks soar

Trade review: current reports, trends, indices, stock prices, bonds, foreign exchange and commodities and analyst recommendations

17:57

The gains on Wall Street continue – NASDAQ is up 2.2% and this after five consecutive days of declines, Dow Jones is up 1.6% and S&P 500 is up 1.7%.

While the indexes soar, government bond yields fall sharply – the ten-year government bond yield falls by 14 basis points to 4.65% and the two-year bond yield by 10 basis points to 4.266%.

The dollar index, DXY which measures the performance of the dollar against a basket of six currencies also drops by 0.4 to 108.9 points.

16:57

Wall Street is surging after the latest Consumer Price Index (CPI) indicated an unexpected slowdown in core inflation in December. Nasdaq rises by 2% and this after five consecutive days of declines, Dow Jones by 1.6% and S&P 500 by 1.7%.

The report season for the fourth quarter began positively today, with the major banks mostly managing to meet market expectations and their shares soaring, especially those of Goldman Sachs , Blackrock , Citigroup andMorgan Stanley

Goldman Sachs reported a significant increase in profit both in the fourth quarter of the year and in its annual results: profit in the fourth quarter jumped 105% and amounted to $4.1 billion, annual profit increased by 68% and amounted to $14.2 billion.

BlackRock reported that the company’s assets under management (AUM) reached a record $11.55 trillion in the fourth quarter. The company reported a net profit of 1.67 billion dollars, an increase of 21% compared to the same period last year. Excluding one-time items, earnings per share were $11.93, higher than forecasts of $11.24.

Citigroup It presented an excess of profit, mainly thanks to an increase in revenues in divisions such as shares and investment banking. the profitNet was $2.9 billion, compared to a net loss of $1.8 billion last year. The bank made a profit $1.34 per share, higher than analysts’ forecasts of $1.22. Revenues increased by 12% to $19.6 billion.
In addition, the board approved a $20 billion share repurchase plan.

Last year, Citi posted a loss in the corresponding quarter due to a series of one-time expenses, including exposures to Argentina’s debt market, political instability in Russia and the bank’s restructuring plan.

JP Morgan reported earnings per share (EPS) of $4.81, significantly higher than the forecast of $4.11. In total, it earned $58 billion this year, a record for the company and a record for any bank in American history. Profit in the fourth quarter increased by 50% compared to last year.

16:30

Wall Street surges after the latest Consumer Price Index (CPI) indicated an unexpected slowdown in core inflation in December, while major US banks opened the quarterly reporting season with impressive results.

Nasdaq rises by 1.6% and this after five consecutive days of declines, Dow Jones by 1.5% and S&P 500 by 1.4%.

The December consumer price index indicated that core inflation, which excludes food and energy, rose 3.2%, slightly lower than the previous month and better than the 3.3% forecast estimated by economists, however, the 0.4% monthly increase in overall inflation was slightly higher than the forecast of 0.3 %. On an annual basis, headline inflation rose 2.9%, in line with expectations.

“Wednesday’s softer-than-expected CPI data offers some relief, especially after last Friday’s strong employment data, that the Fed may still be able to cut rates in 2025,” said Skyler Weinand, managing director of Regan Capital.

The 10-year bond yield fell sharply following the report, and was down 10 basis points to 4.686%.

15:53

Wall Street is now reacting to the inflation data with optimism and the indexes jump by about 1.5% in pre-trade.

Yoni Penning, chief strategist at the Mizrahi Tefahot trading room, responded to the index a few minutes ago: “Despite many expectations for a 0.3% increase, estimates stood out in the market, including ours, that we actually see a 0.4% increase. In this sense, while the figure is not ‘good news’ For the American government or the Fed, it is within the range of expectations. The energy component contributes slightly to inflation this month, mainly due to the increase in natural gas prices in the USA. Deducting this and food prices, core inflation adds a significantly moderate 0.2%.”

“And despite this, the annual core inflation is moderating, and still stands at an absolutely high 3.2%, higher than the overall inflation, which has now risen to 2.9%. And most of all, such that it is not clear when it will bring the annual PCE inflation to the Fed’s target of 2%.”

“Including the publication of the US employment market data last week, until the Fed’s next interest rate announcement at the end of the month. And already at the current stage the market feels comfortable enough to rule out, in practice, the possibility that we will see a move in the same decision.

“The inflation figure published today is the last one that can be devoted entirely to the Biden administration. The next figure will already include eleven days of the Trump administration, not that we expect a change in such a short period. The one after that. Of course there is nothing to talk about about the effect of the expected reductions in the government’s fiscal policy, and certainly not on the expected consequences of reducing the number of illegal immigrants in the country. But there will probably already be some indication of the effect of the tariffs, even if we don’t see it again An interest rate cut by the Fed on 3/19, and most of the chances point to that right now, probably at least we will get an important direction reading.”

15:30

Another moderate increase to sticky inflation in the US:

A few minutes ago, the Central Bureau of Statistics published in the media the consumer price index and it stood for an increase of 0.4% in December, above expectations. The annual inflation stands at 2.9%, as expected and above the one that was in November, 2.7%.

Annual core inflation, which removes the impact of volatile food and energy prices, fell to 3.2%, the expectation was for 3.3%, and the same as in November. In December, core prices rose by 0.2%, as expected and less than the previous month, 0.3%.

This is already the fourth month in a row that prices in the world’s largest economy are rising, and inflation was already at 2.4% in September, close to the Fed’s target of 2%, although much less than the inflation that reached its peak in 2022, but core prices also remain high and an annual increase of over 3%, much above the target.

At the end of the month the Fed will decide on the interest rate, and this after it has decreased since September by a full percentage, and despite this the interest rates in the market have risen – the 20-year bond yield in the US last week passed the 5% mark, and on Friday it reached the highest levels since November 2023. At the same time, the 30-year bond yield briefly crossed the highest level since the end of October 2023. These yields They have risen by about 100 basis points since mid-September, at the same time, despite the fact that the Federal Reserve lowered interest rates by 100 basis points during that period. This is the first time in history that bond yields have moved against the Fed’s trend.

The main reason for this phenomenon is Donald Trump’s entry into the White House in a few days – Wall Street analysts explain that investors fear that the tariffs proposed by Trump may disrupt the global economy and lead to an increase in inflation, and that his tax cuts may increase budget deficits.

14:44

The report season on Wall Street for the last quarter of the year officially opened when the major American banks Goldman Sachs, Wells Fargo and JP Morgan published their financial results a short time ago:

onGoldman Sachs They reported that the revenues were 13.87 billion dollars, compared to the expectation which was 12.39 billion dollars. Earnings per share amounted to $11.95 compared to an expected $8.22.

also inWells Fargo Presented strong results with earnings per share of $1.42 compared to forecasts of $1.35. In the line of revenues, the bank slightly missed the expectations when they amounted to approximately 20.38 billion dollars.

JP Morgan It also exceeded the early expectations when the profit per share stood at $4.81 to the expected level of $4.11 per share. The bank’s revenues amounted to 43.74 billion dollars compared to an expected 41.73 dollars.

13:07

Trading in Europe is conducted hourly with rate increases. The Dax increases by 0.7%, the Potsi increases by a similar rate and the KAC adds 0.3% to its value.

Macro Europe: In Great Britain, the consumer price index was published this morning, which fell at an annual rate to 2.5% in December. At a monthly rate, the index rose by 0.3%.

10:58

The trading day in Europe is hourly in a mixed trend. The Dax is up 0.4%, the Potsi adds 0.6% to its value and the KAC is trading around base levels.

Futures in the US are rising slightly.

09:01

This morning in Asia, the main indices are trading in a mixed trend. The Nikkei is up 0.1%, the Shanghai Stock Exchange is down 0.4%, the Hang Seng is up 0.1% and the Kospi is locked around base levels.

In the US, futures are up slightly this morning.

Last night (Tuesday) on Wall Street, at the end of a volatile trading day that started with gains after the publication of the producer price index in the US, trading closed with a mixed trend. The Dow Jones rose by 0.5% but the Nasdaq fell by 0.3% and the S&P 500 rose 0.1%. Nasdaq on a consecutive Thursday of declines.

The indices were clouded by the large technology stocks, especially Meta and Nvidia which fell by 2.3% and 1.1% respectively. The other five companies in the “Magnificent Seven” group also dropped.

Nvidia last night completed a decrease of about 14% in the last five trading days. This is against the background of American President Joe Biden’s decision, just before his retirement, to impose a presidential order that limits the distribution of graphic processors in the world, with the aim of preventing their leakage to China and Russia, which may use them militarily. Nvidia, which dominates the graphics processor market, is the main victim. The company reacted harshly and claimed that global progress is in danger and that the law is wrong.

● Anger and confusion in the industry: these are the main victims of the chip export restrictions

Julius Baer commented on Biden’s decision and explained that they estimate that in the short term, stocks that provide AI chips may suffer, “since demand may encounter difficulties, mainly due to regulation and additional documents that will be required to comply with the new rules. Here, NVIDIA and the European Union have already expressed Concerns, since half of the EU member states, such as Hungary and Poland, are not on the list, however, we are not It is believed that the new rules will have a significant impact on demand in the short to long term, since the data centers are already located in partner countries, and in the coming years will be built in the partner countries with the US and its alliances. We continue to support our investment portfolio for AI chip suppliers but see another risk hanging over us after the Trump administration takes office, as the laws may be expanded and changes made to the list of countries according to American interests and cooperation with the US and its new government, which leads to uncertainty Virtually unlimited for our AI chip suppliers over the next four years.

“For semiconductor equipment manufacturers we estimate that the impact will be slight, as the unrealized demand for AI chips may create opportunities for alternative non-US chip manufacturers, and overall demand for AI chips may remain fairly stable. However, we are aware of the current restrictions on semiconductor equipment exports to China, Especially equipment for the production of chips with advanced technologies, which may limit the ambitions of Chinese chip manufacturers in the field of chips Their AI. Overall, we believe the situation is likely to remain dynamic, and filings for the various classes may be a burden for entities around the world. It is unclear whether US President-elect Trump will fully implement this restriction on the purchase of AI chips.”

Tesla stood out among the “Magnificent Seven” after analyst Adam Jones from the investment bank Morgan Stanley, raised Tesla’s target price to $430.

The report focuses on the business potential of the robotaxis and the combination of artificial intelligence, which may make Tesla a leading player in the transportation and technology market: by 2030, Tesla’s fleet is expected, according to Morgan Stanley, to cover over a billion miles a day. Jones estimates that by 2040, the company will operate a fleet of 7.5 million vehicles designed for robotaxis services, with revenues of $1.46 per passenger mile and an EBITDA profit of 29%.

According to Jones, the year 2025 is expected to be a turning point, where the market will begin to fully recognize Tesla’s special capabilities in areas such as robotics, energy and artificial intelligence.

At the same time, in the US, the bonds traded in a downward trend in yields, after reaching new highs. The 10-year yield fell to 4.75%, while the two-year yield fell to 4.35%.

Cryptocurrencies traded higher last night after the producer price index data was lower than expected, increasing investors’ appetite for risky assets. Bitcoin is up more than 5% at $96,600, but its price is still 10% away from the record high of $108,268 set on December 17.

Last night (Tuesday), the producer price index in the US indicated an increase of 3.5% in December on an annual basis, less than expected which was 3.8% and slightly more than November, 3.4%.

Today (Wednesday), inflation data will be published in the USA. There, the annual inflation is expected to stand at 2.8% (compared to 2.7% in November).

● The US and Israeli inflation data will be published today. What is expected of them?

Ofer Klein, head of the research division at Harel, emphasizes that “the US labor market data continue to point to economic strength. The number of vacant jobs in November crossed the 8 million mark – the highest level in the last six months. In December, 220,000 new jobs were added in the private sector, the strongest monthly figure since January, and the unemployment rate registered a slight decrease to 4.1%. At the same time, the rate of increase in hourly wages moderated to 3.9% in annual terms, but remained relatively high.”

However, according to Klein, inflation in the US is expected to decrease. Still, “the likelihood of a change in interest rate policy remains low.”

Alex Zebzinski, Chief Economist at the Meitav Investment House explains that the field of AI is starting to affect the American labor market: “In the American labor market data, it is possible to detect an increase in the influence of technology, in particular AI technology. In many sectors that are supposed to be more affected by AI technology, a rapid decrease in jobs is evident , starting with a decrease of about 7% in Business Support Services, about 6.5% in the Marketing Research and Public Opinion Polling sector, and up to a decrease of about 1% in Legal Service that should not happen in an economy that is growing at a relatively high rate.

“The decrease in jobs occurs mainly among the low-wage workers. This is evidenced by the fact that in industries that lost jobs in the last year, the average salary increased at a higher rate than in industries that added jobs.

“In a survey conducted by the US Bureau of Statistics among approximately 1.2 million businesses, it was found that the impact of AI on employment is expected to be mixed. In each of the industries there were companies who said that AI was going to reduce jobs and also those who claimed that there would actually be an increase in jobs thanks to AI. In total, there are more industries that have a net negative effect on jobs because of AI. The negative balance exists precisely in industries that employ many workers such as health services, hospitality and food, transportation and storage.”