Sunday, November 28

Wall Street without direction, the distribution disappoints

The New York Stock Exchange traded on Tuesday in dispersed order shortly after the opening, in a lackluster market, dissatisfied with the results of several distribution groups.

At 15:00 GMT, the Dow Jones gained 0.20% to 35,689.96 points, while the high-tech Nasdaq dropped 0.05% to 15,846.98 points. The S&P 500 extended index took 0.09% to 4,687.37 points.

In general, the indices were moving within narrow margins around equilibrium, within a week marked by the Thanksgiving holiday long weekend, which begins Thursday.

“We can expect volumes to be low,” warned Gregori Volokhine, portfolio manager at Meeschaert Financial Services.

In the absence of macroeconomic indicators, investors reviewed several results of distribution companies, assessed severely.

The chain of electronics stores Best Buy unscrewed (-14.76% to 117.63 dollars) thus despite the announcement of a profit and a quarterly figure above expectations.

The market mainly retained the forecasts for its fourth quarter (from November to January), considered disappointing. The chain faces, like the entire sector or almost, supply difficulties.

“The market reacts in an epidermal manner and punishes a company for reasons over which it has no control,” said Gregori Volokhine.

Same sanction for the Abercrombie & Fitch clothing group (-13.28% to 40.79 dollars), whose results are above forecasts, but which was fled by investors.

The company has deteriorated margins against it, following the sharp rise in the price of transport and additional costs linked to disruptions in the supply chain.

The Zoom online video conference platform was also pilloried (-14.26% to 207.74 dollars) although having published Monday, after market close, a turnover and a net profit higher than expectations.

As is often the case, Wall Street was looking ahead and hardly tasting the forecasts for the fourth quarter, which were lower than analysts’ projections.

“Another + Covid + company which cannot maintain its growth rate” at the end of the pandemic, summed up Gregori Volokhine.

In the aftermath of US President Joe Biden’s announcement of the appointment of the current President of the US Central Bank (Fed) for a second term, bond rates continued to climb.

The average 2-year US government bond rate is at its highest since early March 2020 (0.61%) and the 5-year rate has returned to its level at the end of February last year (1.33%).

The 10-year rate was up 12 basis points (0.12 percentage point) since Friday, to 1.65%.

“We are really starting to think that it is possible that the Fed will accelerate” the reduction of its asset purchases and that once this program is completed, if inflation is still high, “it will tighten rates right away.” , explained Gregori Volokhine.

The market reacted little, however, to the announcement by Joe Biden of a coordinated use of strategic oil reserves of several countries to relieve the price of black gold.

For Mr. Volokhine, it is above all a political gesture, with very limited consequences on the oil market.

“He is not doing it to lower prices, that’s clear, because it’s like a drop of water” in terms of world production, argued the manager.

  1. Nasdaq

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