Today the market started the day with sharp losses, following the consumer price index report, which generated fear as it came out slightly higher than expected in core inflation. For this reason, many assumed that the FED would not lower the rate much, as there was still some inflationary risk.
However, as the day progressed, most began to view this as a positive, implying that the economy is still doing well, as if the economy were about to plunge into a recession or a more severe slowdown, we would be seeing prices well below current levels.
The main inflationary factor was rents. Otherwise, there is still a fairly healthy inflationary process, which is why the markets managed to withstand the situation quite well, and in fact generated a rally towards the close of the day.
Finally, as I mentioned yesterday, there was a very strong rally in the technology sector, being the big winner of the day, which fulfills the stop in the rotation that we have seen in recent months.
Technology is starting to have a very interesting rally, 3% on the day, being the biggest gainer by far, compared to the rest of the market which was up 1% on the day. Semiconductors with a 5% gain is the industry that is making this market rally.
Indeed, it was the only sector with a significant gain, apart from consumer discretionary. Otherwise, all sectors had relatively balanced gains. On the other hand, consumer staples, energy and financials, being the sectors representing the value trade, had losses of almost 1%.
Tomorrow we will have more information with the producer inflation report, so there is still some important data left in the week.
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