An operator of the New York Stock Exchange (GETTY IMAGES NORTH AMERICA/SPENCER PLATT)
The New York Stock Exchange fell sharply on Thursday, recovering from the euphoria that followed Wednesday’s announcement of a marked hike in the Fed’s interest rates and comments from its president.
At around 3:20 PM GMT, the Nasdaq was in turmoil, falling 4.51%, while the Dow Jones was up 2.87% and the broader S&P 500 index 3.36%.
The tone was in stark contrast to the enthusiasm that had swirled at the end of Wednesday’s session, sparked by comments from US Central Bank (Fed) Chairman Jerome Powell over the Fed’s key half-year rate hike. point, which was already widely priced in by investors.
Notably, the official ruled out the prospect of a 0.75 percentage point hike at a future meeting, while operators had so far estimated the probability of such a scenario at 99% at the Fed’s next meeting in June.
But after this collective relief, “the market is waking up and realizing that none of the structural problems that have pushed the market down have been resolved,” said Adam Sarhan of 50 Park Investments.
“Inflation remains high, he said, the Fed will continue to raise its rates and the picture of slow growth has not changed.”
Caught in the current seller, the US tech giants fell massively, such as Apple (-4.19%), Microsoft (-4.79%) or Amazon (-7.13%). Since the publication of its results a week ago, the latter has lost nearly 20% and erased more than $280 billion in capitalization.
The VIX index, which measures market volatility, rose more than 21%.
The indices were not helped by two poor indicators, the first pointing to a slight rise, above expectations, in weekly jobless claims, the other to a decline in productivity in the United States in the first quarter.
Bond yields rose again on Thursday after suddenly easing after Jerome Powell’s press conference.
The yield on ten-year US government bonds thus crossed the symbolic threshold of 3% for the first time since the end of 2018, which it had just crossed on Monday.
According to Adam Sarhan, investors are fearful of witnessing a “return in earnings” of Wall Street-listed companies, a variation on the economic slowdown already at work in the United States.
A feeling fueled by the cautious, even downright pessimistic forecasts of several companies that released their quarterly results on Wednesday and Thursday, especially in the e-commerce sector.
Thus, online sales site eBay fell (-9.08% to $49.48) despite sales and profits above the Wall Street consensus, with observers mostly sticking to the group’s second-quarter projections, lower than the market’s. .
Shopify ecommerce platform also plunged in early trading (-16.88% to $403.54), after posting much lower than expected sales, as well as a significantly higher loss.
Twitter benefited (+3.61% to $50.83) from the communication of Elon Musk, who raised $7 billion from investors to finance the acquisition of the platform.
This amount, collected from funds and wealthy investors such as the entrepreneur Larry Ellison or the Saudi prince Al-Walid ben Talal, will allow to reduce the amount borrowed from banks for the operation.
Snap (-8.60%), Meta (parent company of Instagram, -6.48%) or Alphabet (parent company of YouTube, -4.70%) fell after their fiercest competitor, TikTok, revealed on Wednesday it would run an ad. set up revenue sharing system with the platform’s most popular creators.