Why is Wall Street cheery all of a sudden? – CNN
New York
CNN
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It’s only early January, but so far in 2023 the pendulum on Wall Street has swung (to paraphrase Billy Joel) from sadness to euphoria.
Stocks are off to a solid start following last year’s dismal performance. Even though the Dow fell more than 110 points, or 0.3%, to close Monday’s session it is still up more than 1% this year. The S&P 500 ended Monday down 0.1% while the Nasdaq gained 0.6%. But those two indexes are each up about 1.5% since the end of 2022.
Even the CNN Business Fear and Greed Index, which looks at seven indicators of market sentiment, is now inching closer to Greed territory — after languishing in Fear mode for the better part of the past few weeks.
But why is there such optimism on Wall Street all of a sudden? The headlines still aren’t necessarily that great.
Yes, the market cheered Friday’s jobs report because it showed slowing wage growth that could lead to a further reduction in inflation pressures and smaller rate hikes from the Federal Reserve. But it also showed the pace of job growth is slowing — and that could be a precursor to an eventual recession.
Meanwhile the Institute for Supply Management’s latest data showed the services sector, a big engine of the US economy, contracted last month. And several high-profile companies in the tech, consumer, financial services (and yes, media) industries have announced big layoffs or unveiled plans to hand out pink slips. Retailers such as Macy’s
(M) and Lululemon
(LULU) are warning about sales and profits.
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