After the sharp drop suffered by the main stock indices of Wall Street throughout 2002, in the first month of this year, everything seems to indicate that investors are coming for revenge.
It should be remembered that last year the Dow Jones fell more than 9%, while the S&P 500, that brings together the same number of the most representative companies in the US economy fell by 20%, while the technological nasdaq It was the one that had the worst part, since it contracted no less than 34 percent.
The reasons for these declines are various, but the most prominent have been the impact of high inflation and the consequent monetary policy of the Federal Reserve (FED), which for many analysts is very aggressive.
As a consequence of all this, the huge price correction led to a drop in market capitalization of more than $10 trillionso it became the worst exercise since the 2008 crisis.
But with the counter set to “zero” again, the New York market seems to have turned the page, since after the first month of the year these same indices show increases that in some cases exceed 10%, such is the case of the Nasdaq, while the S&P 500 rose a solid 6.3% and the Dow Jones a little less, 2.3 percent.
In this way, in a very short time these indices have cut part of the losses of last year, although the road to recover them will be long and possibly with a wide variety of obstacles.
The decision of the United States Federal Reserve on the interest rate is expected
The stock market and the impact of the interest rate
Of all of them, one that stands out clearly, once again the Fed’s decision regarding the rate of interest rate rises. In this sense, an increase of 25 basis points is considered an advance compared to the increase of half a point in December, since inflation in the main economies begins to decrease from the highest levels registered in decades.
“Wall Street is slowly becoming confident that this week’s Fed rate hike could end up being the last in this tightening cycle,” said Edward Moya, an analyst at trade group OANDA.
Raising the guideline rate by a quarter point is “prudent considering the moderation of inflationand “weak economic activity numbers,” summarized Steve Englander, an economist at Standard Chartered and a former Fed official.
The US central bank raised interest rates seven times last year in a quest to slow economic growth to reduce inflation.
Other factors that must be taken into account are the results of the leading companies, which are being known these days, as well as data that make the evolution of the US macroeconomics.
Precisely, in the case of tech stocks the rebounds achieved in January are striking, standing out among others Tesla, which rose 41% and Amazon, with 22.4%. While on the side of the financial sector, Citi gained 15% and on the entertainment side, Disney shares marked a gain of almost 25 percent.
Those who invest in Cedears are happy about the strong rises
Wall Street rises and Buenos Aires celebrates
Although until not long ago what was happening in the Big Apple in terms of the stock market seemed distant, since many of the shares listed on that market began to be traded in the form of cedears In the Buenos Aires stock market, everything changed, since the possibility of buying them locally was opened.
In this regard, it should be remembered that Cedears are share certificates of foreign companies that are authorized to operate in the Buenos Aires area, in pesos and under the same conditions as local papers.
In their favor it can be counted that they are exempt from Argentine risk, to which is added the fact that they incorporate the evolution of the exchange rate in their prices.
As a result of the rises in the dollar both locally and in Wall Street prices, those who invest in Cedears are in luck, since for example Tesla has already accumulated a 52% rise, followed by far by Disney and Amazon, with 34 % and 33%, respectively. While Apple, which is one of the great cheerleaders of the local market, shows an advance of 18 percent.
As for what may happen in the short term, beyond the notorious rise registered last month, in the opinion of Gonzalo Gaviña, PPI’s financial adviser “In the last rounds we are seeing a profit-taking, amid various external risks“.
For his part, the analyst Agustín Cramo maintained that “the caution of the last few days was clearly associated with the expectation that existed in terms of rate hikes both in the US and in Europe and the United Kingdom, to which is added the release of US macro data and the presentation of a good number of balance sheets of blue-chip companies,”
Ultimately, according to how the market digests these developments, its evolution will depend, at least in the near future.
