The Wall Street Sign in New York (AFP/ANGELA WEISS)
The New York Stock Exchange opened sharply lower on Thursday, recovering from the euphoria that followed the Fed’s announcement of a marked hike in interest rates and the chairman’s comments on Wednesday.
At around 2pm GMT, the Dow Jones fell 1.44%, the Nasdaq index, with a strong tech color, 2.60% and the broader Nasdaq index 1.76%.
On Wednesday, the market reacted positively, not so much to the announcement of a half-point hike in the Fed’s key rate, which had already been priced in by investors, as to the statements of its president, Jerome Powell.
In particular, the manager ruled out the prospect of a 0.75 point increase at a future meeting.
In the space of a few hours, the operators completely revised their expectations, and on Thursday they estimated the probability of a rise of at least 0.75 points at the next meeting in June as zero when they evaluated it. Fed’s communications.
“It was a catalyst to learn that a +only +half a point increase was likely,” Briefing.com’s Patrick O’Hare said in a note.
According to the analyst, in light of Wednesday’s decisions and comments, some operators also appear to be considering that the Fed can “bring inflation under control without dragging the economy into recession”.
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 continued, “the Fed will continue to raise interest rates and the picture of slow growth has not changed.”
The indices were not helped by two poor indicators, the first reported a slight, higher-than-expected increase in weekly jobless claims, the other 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 10-year US Treasuries thus crossed the symbolic 3% threshold 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.
For example, online sales site eBay (-7.17% to $50.52) fell 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. .
The ecommerce platform Shopify also plunged in early trading (-17.61% to $399.99), after posting much lower than expected sales, as well as a significantly higher loss.
Another e-commerce site, Etsy, dedicated to artisans, was also penalized (-16.24% to $91.57), despite results in line with expectations, due to disappointing forecasts based on a decline in the activity.
Twitter benefited (+3.59% to $50.82) 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.
Parent company of the New York Stock Exchange NYSE, Intercontinental Exchange (ICE) suffered sales (-3.02% to $106.54) after reporting Wednesday after the stock market the impending acquisition of real estate computer services specialist Black Knight, for $13.1 billion.
Snap (-5.92%), Meta (parent company of Instagram, -4.47%) or Alphabet (parent company of YouTube, -3.84%) fell after their fiercest competitor, TikTok, revealed on Wednesday that it would run an ad. set up revenue sharing system with the platform’s most popular creators.