Saturday, May 21

Wall Street drops again while waiting for the Fed

The New York Stock Exchange fell again at the opening on Tuesday after a chaotic session the day before as a monetary meeting of the Fed begins.

From the opening, the indices already largely lost what they had gleaned the day before after a “violent” session, in the words of Schwab analysts.

At 3:00 p.m. GMT, the Dow Jones index dropped 1.95%, the technology-dominated Nasdaq fell 2.68% and the S&P 500 fell 2.34%.

On Monday, the indices, swept away by fears of a future rise in interest rates, had sunk to their lowest in months in session, before an extraordinary rebound.

The Dow Jones index had finally advanced by 0.29% to 34,364.50 points after losing up to 3% at midday. The Nasdaq had gained 0.63% to 13,855.13 points, after having melted by 5%. The S&P 500 had ended in a snatch in positive territory at 4,410.13 points (+0.28%).

“On Monday the markets took a drastic U-turn when all indices were in the red, continuing the declines that have occurred over the past three weeks,” said Art Hogan of National Securities.

He points out that the S&P 500, the index that best represents the U.S. market as a whole, fell 8% below its record on January 3, “its most intense fall since the crash caused by the outbreak of the pandemic. in February and March 2020”.

A two-day meeting of the US Federal Reserve (Fed) began on Tuesday. While an immediate increase in central bank interest rates is not on the cards, investors are waiting for clues about the volume and pace of forthcoming monetary tightening aimed at tackling persistent inflation.

While so far the Fed had hinted that it would make three quarter-point (0.25%) hikes over the year, some analysts now expect between four and six rate. By increasing the cost of money, rate increases appear to be unfavorable to companies, to their future results and therefore to their actions.

Bond yields on 10-year Treasury bills, which move inversely to the price, fell slightly to 1.72% against 1.77%, while investors favor safe values ​​such as bonds.

Boosted by these prospects for more expensive money, the dollar climbed against the euro to 1.1278 dollars for one euro (+0.42%), a highest for a month.

“Safe havens are also on the rise due to the escalation of geopolitical tensions between Russia and Ukraine,” noted Wells Fargo analysts.

The United States has said it is ready, in the event of a Russian attack on Ukraine, to ban the export of American technology to Russia.

In terms of stocks, as the earnings season is in full swing, the groups 3M (-0.88% to $171.14), American Express (+4.18% to $165.66) and Johnson and Johnson (+0.31% to 163.47 dollars) all announced better than expected quarterly results, although the pharmaceutical group disappointed in terms of turnover.

The title of the American aeronautics and defense company Raytheon Technologies fell 1.27% to 86.93 dollars after reporting mixed results for 2021 and disappointing forecasts for the current year.

The title of the maker of smart exercise bikes Peloton, which has had great success with the pandemic but recently faced a drop in demand, lost 3.80% to 28.60 dollars. The title has fallen by almost 20% for a month.

  1. Nasdaq

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