The US stock market opened lower on Wednesday. The general index S&P 500 opened down 0.1 percent, while the technology-focused Nasdaq Composite had fallen 0.2 percent. The Dow Jones was down 0.3 percent.
The US market closed in a clear decline yesterday, when the ISM purchasing managers’ index, which describes the development of service sectors, was stronger than expected. Investors are waiting for the central bank, the Fed, to delay its rate cut intentions.
Member of the Fed Executive Board Christopher Waller said according to the news agency Bloomberg, however, that he believes in a continuous decrease in inflation towards the two percent target. The same message was also given by the employment data of the private sector.
According to the ADP publication describing the development of jobs in the private sector, 122,000 net new jobs were created in the United States in December, while the consensus of economist forecasts collected by the news agency Bloomberg expected 140,000 jobs. In November, 146,000 jobs were created.
According to Bloomberg, the number of new jobs is the lowest since August.
On the other hand, the number of fresh unemployment compensation applications was lower than expected, which indicates that the economy is running in the red despite everything.
According to the statistics, 201,000 new compensation applications were received in the week that ended on Saturday, while the consensus of economist forecasts collected by the news agency Bloomberg expected 215,000 applications. In the week before this, 211,000 applications were received.
Investors still expect that the central bank may cut interest rates a few times in 2025. However, some analysts estimate that stocks may experience a short-term correction if economic growth prospects weaken.
For example, Goldman Sachs noted, according to Bloomberg, that the correlation between the stock and bond markets is once again negative, which could increase the risk for stocks if interest rates continue to be high.
Chief Strategist at Morgan Stanley Mike Wilson predicts that the first half of 2025 may be challenging for markets, but the rest of the year is likely to look better if inflation continues to decline and economic growth remains stable.
“Historically, significant declines in share prices are often associated with recessions, but at the moment there are no signs of the economy slowing down”, comments a Deutsche Bank analyst Henry Allen According to Bloomberg.
Quant stocks plunge
Share prices of companies developing quantum computers plunged after the CEO of artificial intelligence giant Nvidia Jensen Huang said that highly usable quantum computers are not expected for decades.
Huang said at an event for analysts that usable quantum computers can be expected in 15 years at the earliest, but sooner than 30 years.
“If you chose 20 years, I think a lot of us would agree,” Huang said on a conference call with analysts, according to Bloomberg.
Shares of US-based Ionq had fallen more than 40 percent about 40 minutes after the opening.
Source: www.arvopaperi.fi
