The New York Stock Exchange ended a volatile and choppy session on Thursday, concerned about inflation and geopolitical developments around the war in Ukraine.
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According to final results, the Dow Jones index lost 0.33% to 31,730.30 points. The tech-heavy Nasdaq climbed 0.06% in the final minutes before the close at 11,370.96 points. The S&P 500 fell 0.13% to 3930.08 points.
Earlier in the session, the indices had attempted a significant rebound, the Nasdaq even climbing briefly by 1.60%, before demoting into the red to align a sixth loss in a row for the Dow Jones.
“Markets continued to be nervous following another inflation report which showed wholesale prices continued to rise,” Schwab analysts said.
“Furthermore, expectations of an aggressive Fed (US central bank) amid slowing growth were key contributors to volatility, along with lockdowns in China, the war in Ukraine, and the strong dollar.”
The market was still hurt by US inflation data in April released the day before, which beat economists’ expectations of 8.3% year on year, with price inflation still near a 40-year high.
This was followed on Thursday by the producer price index (PPI) for April which, although it slowed down a little, to +0.5% over the month, is still up 11% over one year.
“It shows that there are still problems in the supply chain which will have their effect in the system, which means that consumer prices will come down much more slowly than expected,” said Christopher Vecchio, analyst for DailyFX.
“It also means the Fed is going to adopt a rapid pace of rate hikes,” he continued.
Beyond inflation, another geopolitical factor negatively impacted market sentiment on Thursday, according to Peter Cardillo of Spartan Capital Securities: Finland’s desire to join NATO “without delay”.
This wish was immediately thwarted by Moscow, which promised Helsinki a “military-technical” response.
“The market is worried about the spread of war; Finland is talking about joining NATO and if that happens Vladimir Putin has made it clear that he will fight back,” Cardillo said.
“If Russia were to retaliate, we could find ourselves at war, the United States or other European countries. This is a negative factor for the market,” he added.
The analyst specified that despite fears of inflation, yields on ten-year Treasury bills, which move in the opposite direction to the price of the bond, eased to 2.85% instead of 2.92% the Eve.
“It’s the fear factor that comes into play, so you buy Treasury bonds,” the prices of which go up as their yields go down.
A safe haven, the dollar climbed to a 20-year high against other major currencies.
The Dollar index, which compares the greenback to a basket of other currencies, reached 104.83 points on Thursday, a level not seen since December 2002.
Around 6:30 p.m. GMT, the euro was at its lowest since December 2017 against the greenback at 1.0366 dollars for one euro (-1.40%).
“It is obvious that the rate hikes of the Fed will exceed by far those of Europe, a scenario which makes the greenback more attractive than the euro”, underlined Joe Manimbo of Western Union.
At the rating, six out of eleven S&P sectors ended in the green, including the health and real estate sector.
Disney was shunned (-1.05% to 104.11 dollars) after the entertainment giant published a quarterly profit almost halved. However, the group has seen an increase in subscribers to its Disney+ streaming video platform.
Twitter was further penalized by 2.18% to $45.09 as the group about to be acquired by Elon Musk lost senior officials and began a cost-cutting campaign.
Very volatile, the action of the manufacturer of electric pickups Rivian, which had stalled on Monday, climbed 17.96% to 24.30 dollars. The company has confirmed that it is on schedule to open its new factory in Georgia (south) in 2024.
The viral actions GameStop (+10% to 89.57 dollars) and AMC (+8% to 11.20 dollars) were again favored by online brokers.
GameStop, remembered for having shaken up Wall Street at the start of 2021 by becoming the darling of online investors, had to be suspended from listing several times on the Nasdaq as it was in demand.