Wall Street retreats as interest rates escalate – 2022-04-11 22:56

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Operators of the New York Stock Exchange (GETTY IMAGES NORTH AMERICA/SPENCER PLATT)

The New York Stock Exchange retreated on Monday as bond yields escalated which feared US inflation for March.

According to final results at the close, the Nasdaq, with strong technological coloring, pulled down by dropping 2.18% to 13,411.96 points. The Dow Jones index lost 1.19% to 34,308.08 points and the S&P 500 fell 1.69% to 4,412.53 points.

“The equity market retreated on another surge in Treasury yields amid prospects for aggressive monetary policy tightening,” Wells Fargo analysts noted, adding that the war in Ukraine and the confinements in China against the Covid-19 “also darkened the economic outlook”.

US inflation for March, due out on Tuesday, is expected to be “extraordinarily high”, White House spokeswoman Jen Psaki warned on Monday.

Many economists forecast the consumer price index (CPI) up 8.5% year on year in March, the highest since 1981, when inflation was already at a forty-year high at 7.9% in February.

“Rising bond yields are a continuation of all the worries we’ve been talking about for weeks, inflation, inflation, inflation,” LBBW’s Karl Haeling told AFP.

Yields on 10-year US Treasuries rose to 2.78% from 2.70% at the last close. This is their highest level since January 2019.

The analyst also pointed out that the US Treasury made three bond issues this week (at three, ten and thirty years), which added pressure on bond prices, pushing up their yield.

This tension in the bond market was “the biggest factor that hurt the stock market as we saw the Nasdaq leading the decline,” Haeling said.

On the Nasdaq, so-called growth stocks, which are very sensitive to inflation and interest rates, have plunged.

Tesla lost 4.83% to $975.93, Google (Alphabet) dropped more than 3%, Meta (Facebook) Amazon and Apple all lost more than 2%.

On the semiconductor side, Nvidia fell 5.20% to $219.17.

But the decline was largely shared by the eleven sectors of the S&P 500, starting with energy (-3.11%), weighed down by the fall in crude prices.

The price of black gold has fallen back below 100 dollars of barrels while there are concerns for Chinese demand.

Exxon Mobil lost 3.44% to 83.85 dollars, Chevron offloaded 2.57% to 165.56 dollars and Occidental Petroleum 6.28% to 97.98 dollars.

In China, where inflation accelerated sharply last month, a resurgence of Covid-19 has put several regions on lockdown.

Shanghai, the country’s economic capital, has been in total or partial confinement for two weeks, with the 25 million Shanghainese forced to stay at home.

“There are also more and more downward revisions to the American economic forecasts,” said Karl Haeling. “Some economists say the likelihood of a recession is increasing.”

To these economic considerations was added a technical factor increasing volatility: “with the Easter holidays and the markets closed for Good Friday, it will take less trading to move the markets”, indicated the LBBW analyst.

Shares of Texas-based computer security group SailPoint soared 29.16% to $64.05 as the company on Monday announced an agreement with private equity firm Thoma Bravo to be acquired for $6.9 billions of dollars.

After a week of adventures between the boss of Tesla Elon Musk and the social network Twitter, the title of the platform gained 1.69% to 47.01 dollars.

The whimsical billionaire has given up sitting on the board of directors of Twitter.

The richest man in the world announced in early April that he had taken a 9.2% stake in the capital of Twitter, making him the largest shareholder.

Nasdaq

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