The New York Stock Exchange ended in sharp decline on Thursday, stunned by high US inflation which raised fears of an acceleration in interest rate hikes from the Central Bank (Fed).
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According to final results, the indices ended at the lowest of the session, the Dow Jones losing 1.47% to 35,241.59 points. The tech-heavy Nasdaq fell 2.10% to 14,185.64 points. The S&P 500 dropped 1.81% to 4,504.08 points.
Equities looked gray “as inflation is again higher than expected, further fueling expectations of a firm tightening of monetary policy from the Fed”, summed up analysts at Wells Fargo.
Inflation continued to accelerate in January in the United States to reach 7.5% over one year (+0.6% over the month), its fastest pace for nearly 40 years and more than expected, has announced the US Administration on Thursday.
We have to go back to February 1982 to find such high annual inflation, according to the consumer price index (CPI) published Thursday by the Labor Department. Over one year, energy prices have increased by 27%, and those of food have climbed by 7%.
Faced with this rise in prices and fears that the American Central Bank (Fed) will not be more strict in its monetary policy in order to curb inflation, bond yields on 10-year Treasury bills crossed the 2 mark on Thursday. %, for the first time since July 2019. They climbed to 2.04%.
Yields on two-year bills, reflecting investor fears of a faster Fed rate hike, jumped 18% to 1.61% flattening the curve between medium and long-term rates.
“The inflation numbers came out stronger than expected and that’s negative for the market,” said Peter Cardillo of Spartan Capital.
“This means the Fed could be more aggressive and if it has signs of wages rising further in the next jobs report on March 4, it could raise rates by half a percentage point (0.50 %) all at once,” noted the analyst.
The next Federal Reserve Monetary Committee meeting is scheduled for March 15-16.
But some analysts now fear that the Fed could raise rates on the spur of the moment without waiting for that official meeting date, as one of the members of the Central Bank’s Monetary Committee, James Bullard, suggested on Thursday.
The eleven S&P sectors all ended in the red, starting with sectors sensitive to the rise in the cost of money, such as the real estate sector (-2.86%) or that of information technology (-2 .75%).
Even groups that shared good news through their quarterly results were punished.
First-searched Uber’s stock eventually plunged 6.07% to $37.75 despite the group reporting net profit of $892 million in the fourth quarter, a sign that profitability is no longer a chimera for the car rental giant with drivers (VTC).
Disney saved the day (+3.41% to 152.25%) after seeing its turnover increase by 34% over one year, to 21.8 billion dollars in the first quarter of its financial year. Profit was $1.1 billion.
Its online video service, Disney+, gained 11.7 million subscribers in one quarter, reaching 129.8 million, significantly more than the 124.6 million anticipated.
Twitter fell 2.01% to $37.07 after seeing user numbers rise in the fourth quarter of 2021, but revenue came in below Wall Street expectations. Its board of directors has also approved a new share buyback program for $ 4 billion, which supported the title at the start of the session.
Semiconductor and microprocessor makers have been particularly hard hit as Intel boss Pat Gelsinger warned that semiconductor components will continue to be hard to source in 2023.
Thus the titles of Intel (-2.10%), Nvidia (-3.30%) or even AMD (-5.33%) fell.
Reference-www.tvanouvelles.ca