Wall Street ends lower but limits losses thanks to technical recovery – 06/05/2022 at 10:57 pm

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

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

The New York Stock Exchange closed the week lower on Friday, but managed to limit its losses thanks to a technical recovery, even if investors remain gloomy.

The Dow Jones lost 0.30% to end at 32,899.37 points, the Nasdaq index fell 1.40% to 12,144.66 points, and the broader S&P 500 index recovered 0.57% at 4,123.34 points.

After experiencing its worst session since 2020 on Thursday, the New York market initially appeared to be reliving a nightmare at the start of the session, with the Nasdaq falling to 2.65%.

The tech-inspired index even briefly fell below 12,000 points for the first time in 16 months, posting a loss of more than 26% since its peak in November last year.

Peter Cardillo, of Spartan Capital, had warned that the indices, on the downside, were approaching key technical hurdles and were likely to find material for a rebound. This is what happened in the middle of the morning.

“The mechanism worked and prevented prices from falling,” says Karl Haeling of LBBW bank. “But it might have been better if they had gone down 5% again,” like the day before.

For the analyst, this technical rebound reduces the likelihood that investors will view the current levels as a bottom and buy again.

The monthly US employment report, published before the stock market, did not help operators out of their gloom.

First seduced by the 428,000 job creations in April, better than expected, they saw less encouraging elements after that.

The downward revision of 39,000 for March thus dampened the April figure.

In addition, economists have expressed concern about a slight decline in the employment rate (ratio of employed or jobseekers to the population of working age), while the labor market has already collapsed.

“There is nothing in it that the Fed can steer in any way,” concluded Chris Low of FHN Financial.

In the bond market, yields continued to rise, boosted by the prospect of the US central bank’s (Fed) key interest rate reaching at least 3% by the end of the year, an 85% probability scenario for operators.

The yield on 10-year US Treasuries rose to 3.14%, not far from 3.26%, the highest level in the past 11 years.

“Ultimately, the question is whether monetary policy can bring inflation back to acceptable levels without triggering a prolonged recession,” argued Karl Haeling.

Listed Under Armor was hit by investors (-25.88% to $9.85) after results and forecasts were disappointing. The sports equipment manufacturer expects a decline in margins and a loss of growth of about 3 percentage points due to supply problems.

The release coincided with that of Germany’s Adidas, which also suffered from lockdowns in China and slashed its margin targets for the year.

These bad numbers dent the entire sportswear industry, from Nike (-3.49%) to Lululemon (-7.73%).

DoorDash’s meal-delivery platform was penalized (-1.42% to $72.11) despite higher-than-expected revenues, and investors were left stunned by the continued slowdown in growth, after the 2020 and 2021 crops hit. boosted by the pandemic.

Tough day also (-7.70% to $15.70) for the exercise bike and connected treadmill specialist Peloton, which would be looking for investors willing to take a minority stake of about 15 to 20%, the Wall Street said. Journal, from the group’s treasury, which is currently in trouble.