The floor of the New York Stock Exchange (GETTY IMAGES NORTH AMERICA/SPENCER PLATT)
The New York Stock Exchange signed its worst session since 2020 on Thursday, with investors taking the opposite view of the previous day’s recovery after a second reading of the Fed’s announcements on Wednesday.
The Nasdaq recorded the third largest loss of points in its history, following the two black sessions on March 12 and 16, 2020, at the start of the coronavirus pandemic.
The tech-heavy index fell 4.99%, while the Dow Jones fell 3.12% and the broader S&P 500 index fell 3.56%.
“We had one of the best sessions yesterday and one of the worst today,” said Edward Jones’ Angelo Kourkafas.
After being excited on Wednesday by comments from Federal Reserve (Fed) Chairman Jerome Powell, who had ruled out a further tightening of monetary policy and a 0.75 percentage point hike in his next meeting, the market came Thursday again.
“The fact[that the US central bank]ruled out a 0.75 percentage point hike has not changed the fact that the economy is slowing and the Fed is going to tighten monetary policy at a rapid pace,” said Angelo Koukafas. †
“People started to think a little more about the Fed and its communications and realized it wasn’t going to get any better,” said Maris Ogg of Tower Bridge Advisors.
For her, Thursday’s move is also explained by profit taking, which followed the jump from the day before, and the rise in bond yields.
“That’s what scared the stock market,” she said.
10-year Treasury yields rose above 3.10% for the first time since November 2018.
As usual, tech and growth stocks were the first to come under investor scrutiny, now weighing the heaviest on Wall Street.
Apple (-5.57%), Microsoft (-4.36%), Tesla (-8.33%) or Amazon (-7.56%) were shaken. The latter is down nearly 20% since the release of its results a week ago, erasing more than $280 billion in market valuation.
The New York market was also misled by some mixed business results, accompanied by very measured, even pessimistic forecasts.
“Companies with the best numbers usually publish first,” says Maris Ogg. “Bad come later,” that is now, she says.
In particular, Wall Street tapped a series of publications from e-commerce sites that were deemed without panache, even troubling.
Online sales site eBay suffered from analysts’ expectations for the second quarter (-11.72% to $48.04), despite sales and profits above the Wall Street consensus.
The e-commerce platform Shopify also collapsed (-14.91% to $ 413.09), after publishing much lower than expected sales and a significantly higher loss.
Twitter benefited (+2.65% to $50.36) 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 (-9.58%), Meta (parent company of Instagram, -6.77%) or Alphabet (parent company of YouTube, -4.76%) suffered after its biggest competitor, TikTok, announced on Wednesday it was going down ad revenue set up a sharing system with the platform’s most popular creators.
“The market will remain volatile and volatile until we have confirmation that inflationary pressures are easing and bond yields are coming with it,” said Angelo Kourkafas.