Wall Street resumes profits and after a strong rebound the S&P 500 avoids closing its fourth week down

It has been a period marked by high volatility on Wall Street. In fact, earlier in the week, the market fear gauge spiked to its highest level since October 2020.

And now, after a series of sharp daily declines, New York's major indices closed their latest session with a solid rally. Thus, the Nasdaq rose 3.2% this Friday, while the S&P 500 climbed 2.4% and the Dow Jones recovered 1.7%.

The advance marked the S&P 500's biggest rise since June, and prevented it from ending its fourth week in negative territory, though the Nasdaq is still on track for its worst month since 2008.

The good results that companies are publishing are helping to improve the mood of investors. For example, Apple shares rose more than 5% after stellar quarterly results, providing some stability to stock market averages.

Wells Fargo Advisors explained that investors "have remained nervous about the Federal Reserve's turn away from the highly expansive monetary stimulus of the pandemic era. On Wednesday, officials set the stage for an interest rate hike in March, while Fed Chairman Jerome Powell's remarks were interpreted as more aggressive than expected."

But according to Goldman Sachs, stocks are still the market's best bet because valuations are "nowhere near" the highs they reached at the height of the dot-com bubble two decades ago, said Sharmin Mossavar-Rahmani, head of the group. bank's investment strategy. Unlike in the late 1990s, the US stock market today has broad-based returns and corporate earnings are mostly strong, she said.

Analysts have raised their earnings forecast for 2022 and 80% of the companies that have presented their balance sheets this season announced optimistic projections.

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On the fixed income side, meanwhile, US Treasury bond prices fell, pushing prices higher. The yield on two-year Treasury bonds that are more sensitive to interest rates rose to 1.212% from 1.190% on Thursday.

Yields on 10-year notes haven't risen as fast, which some market analysts are interpreting as a sign that investors expect the Fed's rate hikes to stifle economic growth. They stood at 1.831% on Friday, compared to 1.747% reached a week ago.

The US Commerce Department reported that December's core personal consumption expenditures price index - which is the Fed's preferred gauge of inflation - rose 4.9% from a year earlier. This jump is higher than economists expected and is the highest figure since September 1983.

local landscape

Locally, the SP IPSA fell 0.44% to 4,542 and ended the week down 2.2%.

Banchile Inversiones pointed out in a report published today that "despite the outstanding performance of the IPSA so far in 2022, we see room for much more."

The firm argued that "its current value (4,600 points) is the floor of our recommendation range, with ample room to approach its ceiling (5,500 points)."

They mentioned that "our buy recommendation is explained by a valuation level close to its historical minimum, an attractive copper price, a level of confidence close to neutrality and a level of uncertainty with a tendency towards moderation".

With regard to fixed income, Banchile Inversiones highlighted that "the local increases dissipated after the cabinet of the new government was known. Towards January 27, the BTP5 rate accumulates a fall of almost 40 bp from its maximum of January 19 January (6.1%), standing at 5.75%".

They added that "all in all, and despite a more restrictive monetary policy by the Fed, we maintain our projections unchanged in the face of less local uncertainty. In detail, for December 2022 we project the rate of the BTP 10 at 6.4%, while by December 2023 we expect a decrease to 6%".

They specified that "among the risk factors, a greater uncertainty due to the constitutional process and the fiscal scenario stands out."

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Scenario in Europe and Asia

European markets continue to be weighed down by Wall Street and the geopolitical tension surrounding the Ukraine crisis.

The Euro Stoxx 50 fell 1.15%, the Frankfurt DAX fell 1.32%, the London FTSE 100 lost 1.17%, the Paris CAC 40 fell 0.82%, the Madrid IBEX 35 lost 1, eleven%.

The negative rates of the German Bund fall to around -0.04%.

Tokyo's Nikkei rose 2.09%, Hong Kong's Hang Seng fell 1.08% and mainland China's CSI 300 fell 1.21%.