Despite the initial race to catch up: Wall Street recorded slight discounts

Despite the initial race to catch up
Wall Street is showing slight discounts

Despite a race to catch up, the price barometers of the US stock market are falling slightly. The uncertainty surrounding the Archegos share has subsided somewhat, and the Biontech figures are very well received. Consumer confidence is also positive: it has reached a new high in the pandemic.

The US stock exchanges recorded slight discounts. However, the Nasdaq composite largely made up for higher losses initially. The mood was dampened by the renewed rise in yields on the bond market. However, the fact that the sentiment of consumers, which are so important to the US economy, brightened more strongly than expected in March had a supportive effect. The consumer confidence index rose to its highest level since the pandemic broke out.

The Dow Jones index closed 0.3 percent easier at 33,067 points, the S&P 500 also fell 0.3 percent. The tech-heavy Nasdaq composite was down 0.1 percent.

Because of the brightening prospects for the economy, investors parted with supposedly safe investments such as government bonds, which drove their yields up. There is also growing conviction among asset managers that the US Federal Reserve will raise interest rates in the coming year, even if the Fed has promised that it will not raise interest rates until the employment situation has improved and inflation has remained above 2 percent for a certain period of time .

Rising yields as a test of Fed policy?

The market is testing this assurance from the Fed, commented Hugh Gimber of JP Morgan Asset Management on the bond market. Gimber expects bond yields to continue rising for the remainder of the year. But that doesn’t necessarily have to dampen interest in shares. In fact, a shift has been observed in the equity markets in recent weeks: investors sold the previously well-performing stocks of technology companies, whose earnings prospects are now viewed more critically, in favor of sectors that are seen as beneficiaries of an economic recovery, such as energy and banks and airlines.

However, this so-called reflation trade had stalled somewhat in the past few days in view of the increasing number of corona infections, new virus mutants and, in many places, only sluggishly progressing vaccination campaigns. Added to this are fears that US President Joe Biden’s trillion dollar stimulus package will result in tax increases. And last but not least, the distressed US hedge fund Archegos Capital Management is likely to keep market participants busy for some time to come.

Biontech’s business figures, which were already published before the stock market, were very well received. The share advanced 8.9 percent. Shares hit by the Archegos distress sales rebounded. ViacomCBS grew by 3.6 percent, Discovery by 5.4 percent and Farfetch by 8.8 percent. The banks Goldman Sachs (+ 1.9%) and Morgan Stanley (+ 1.6%) were able to limit the losses from the deals with Archegos, as the Wall Street Journal reported. Archegos Capital’s financial difficulties recently led to some shares falling sharply. Merck & Co lost 1.7 percent. The US health authority FDA has rejected an application by the pharmaceutical company to allow the cancer drug Keytruda to also be used in certain breast cancer patients.