Friday, January 21

Wall Street in disarray, investors try to see beyond Omicron

The New York Stock Exchange was moving in disarray on Tuesday, after setting new records on Monday as investors tried to project themselves beyond the Omicron variant crisis of Covid-19.

At around 3pm GMT, the Dow Jones was up 0.73% at 36,850.92 points, the high-tech Nasdaq was down 0.26% at 15,791.01 points, and the S&P 500 was up 0. 38% to 4,814.76 points.

Dow Jones and S&P 500 closed on new records on Monday.

“Markets appear to continue to grasp the spread of the Omicron variant without flinching, led by signals that suggest its severity is less than previous variants,” Schwab analysts wrote in a note.

The American Johns Hopkins University, which is a benchmark in the matter, reported more than a million new cases of Covid-19 in the United States on Monday alone, unprecedented.

“It is quite astonishing that fears decrease while the cases increase”, reacted Gregori Volokhine, president of Meeschaert Financial Services.

“Maybe it’s more of a decrease in fear over six months,” he continued. “The market is going up because investors are looking into the future.”

The indices also benefited from the New Year effect, with an investment flow directed towards equities.

“At the end of last year, there were more people who feared a correction than optimistic people,” says Gregori Volokine. “So maybe there was too much negativity at the end of the year and now that the new year is starting these investors are wondering if they are not missing out on the market upside.”

This buying trend on equities was accompanied by an opposite flow on bonds, which were massively neglected.

After their Monday jump, bond rates (which rise when bond prices fall) remained firm.

The benchmark ten-year US government bond rate even rose to 1.68% on Tuesday, 20 basis points higher than a week ago (0.20 percentage point), before falling back to 1.66%.

Traders link this tension to the anticipation of a series of rate hikes by the American Central Bank (Fed) in 2022.

Another element of explanation, “we realize that the real interest rates of bonds will remain negative for a very long time”, analyzes Gregori Volokhine. “The 10-year is at -3 or -3.5%”, in real rate, corrected for inflation. “Once again, we are starting the year and there is no alternative” to actions.

Soaring interest rates continued to support the finance sector. Goldman Sachs (+ 2.91%), Visa (+ 2.18%), JPMorgan Chase (+ 2.84%) or American Express (+ 2.65%) thus boosted the Dow Jones, which was doing better than the others major clues.

Already sought after Monday, Ford was still gaining height (+ 6.91% to 23.27 dollars), after indicating that it would almost double the production of the electric version of its star F-150 pickup, the vehicle the most sold in the United States.

The F-150 Lightning, whose first deliveries are expected in the spring, will be manufactured at 150,000 units per year. Ford had already raised its target from 40,000 to 80,000 units in September.

Apple (-0.07% to 181.88 dollars) remained close to the symbolic threshold of 3 trillion dollars of market capitalization, after having exceeded it, for the first time, on Monday.

Overall, tech stocks were less dashing than the day before, especially platforms or apps, such as Twitter (-2.18%), Roblox (-3.51%) or Snap (-4.10%) .

  1. Nasdaq

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