The New York Stock Exchange ended lower on Wednesday, anxious about the intentions of the American central bank (Federal Reserve, Fed), which confirmed that it was considering accelerating interest rate hikes to fight inflation. .
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According to final results at the close, the Dow Jones index lost 0.42% to 34,496.51 points. The Nasdaq dropped 2.22%, slipping below 14,000 points to 13,888.82 points. The S&P 500 fell 0.97% to 4,481.15 points.
Investors watched anxiously throughout the session for the release of the minutes (the “minutes”) of the Fed’s last meeting for new clues about the scale of future rate hikes and the pace of the rate cut. central bank balance sheet.
The Nasdaq dropped almost 3% in session, then regained some ground before the close.
The members of the Fed showed, in these “minutes”, that they were in favor of more marked monetary tightening.
“Many participants pointed out that one or more 50 basis point hikes (half a percentage point, editor’s note) (…) could be appropriate in future meetings, particularly if inflationary pressures remain high or subside. ‘intensify’, is it indicated in this report.
The Fed began raising overnight rates in mid-March for the first time since 2018, but opted for a more modest hike of just a quarter of a percentage point.
Above all, the central bank now seems determined to more quickly undo the billions of dollars in asset purchases that it stored up during the health crisis to support the economy.
“The Fed has revealed that it plans to reduce its balance sheet by almost $100 billion per month, which is double the rate of balance sheet reductions carried out between 2017 and 2019,” commented Paul Ashworth of Capital Economics.
For Sam Stovall, chief strategist at CFRA, “this approach is not stricter than what was expected”.
The Nasdaq, which had dropped almost 3% in session, regained some ground before the close and the Dow Jones pared its losses a little.
But the VIX index, called the “fear index” because it reflects volatility, resumed the upward slope, recording in session “its biggest daily jump since February 10”, said Patrick Martin, analyst for Schaeffer. .
Under these conditions, bond yields rose. Yields on 10-year Treasury bills climbed to 2.62% from 2.54% the previous day, a high since March 2019, well before the COVID-19 pandemic.
Rates on 30-year mortgages, a benchmark in the US market, also crossed the 5% threshold on Wednesday for the first time in more than 10 years and mortgage applications fell for the fourth week in a row. , according to the Mortgage Bankers Association.
Developments on the war in Ukraine also remained front and center for investors as the United States announced a new round of “devastating” sanctions against Russia, targeting big banks and the children of Vladimir Putin.
Listed low-cost airline Spirit, which is being outbid by JetBlue after an initial takeover bid by Frontier, fell 2.41% to $26.27 after climbing more than 20 % the day before.
The title of JetBlue, which made a counter-offer of 3.6 billion dollars on Spirit, higher than that of Frontier, melted by 8.72%. That of Frontier plunged 10.99% to 10.61 dollars.
Twitter dropped some ballast (-0.43% to $50.76), after being celebrated on Wall Street in recent days when Tesla boss Elon Musk announced that he had taken a sizeable stake in the network. company, making him its largest shareholder.
So-called growth technology stocks, very sensitive to rising rates, took on water like Apple (-1.85%), Amazon (-3.23%), Tesla (-4.17%) or Meta ( Facebook -3.68%).
Those of semiconductor manufacturers even more, like Nvidia (-5.88% to 244.07 dollars) or AMD (-2.95%).
Six of the eleven S&P 500 sectors ended in the red, starting with consumer products (-2.63%) and information technology (-2.55%), passing through banks (- 0.66%).
Reference-www.tvanouvelles.ca