Disappointment with Paypal
US stock markets turn negative
05/09/2023 11:33 p.m
Is the Fed going to pause interest rates? Traders on Wall Street are hoping for some insight from the latest inflation data. The day before the figures are published, nervousness increases. Gold is in demand, but the leading indices are falling.
Concerns about US inflation, the US debt ceiling and the bleak corporate outlook pushed Wall Street into the red on Tuesday. The Dow Jones Index the standard values closed 0.2 percent lower at 33,561 points. The tech-heavy one Nasdaq fell 0.6 percent to 12,179 points. The broad one S&P 500 lost 0.5 percent to 4119 points.
Investors were eagerly awaiting inflation data from the US on Wednesday, which they hoped would provide further clues as to when the US Federal Reserve will announce the end of its cycle of interest rate hikes after strong job data on Friday. “We’ve finally reached the point where the Federal Reserve may have reached the end of its tightening cycle and we can start looking forward to it,” said trading house Oanda analyst Craig Erlam. “However, for that to be the case, we need to see evidence in the data that the Fed is on track towards its 2% inflation target starting tomorrow.”
The dispute between Republicans and Democrats over raising the debt ceiling in the United States also made investors nervous. Biden is expected to meet with leaders in Congress on the issue Tuesday. “The US Treasury Department has designated June 1st as ‘X-Day’. If no agreement is reached by then, the US may not have enough funds to meet its commitments, leading to a technical default and potentially triggering a financial crisis “said Konstantin Oldenburger, analyst at broker CMC Markets. Such situations have eased again and again in the past, but investors should not underestimate them.
The nervousness of the investors supported that gold, which is considered a “safe haven” in times of crisis. The metal rose 0.6 percent to around $2,034 a troy ounce.
Minor tones from companies
Cautious tones from companies also contributed to the pessimistic mood. A reduction in the margin forecast pushed about the PayPal stock, which fell by more than twelve percent. The company expects adjusted operating margin to increase by 100 basis points in 2023. Previously, it was counting on 125 basis points. According to analysts, investors fear, among other things, that PayPal will lose market share to Apple.
An annual forecast below analysts’ expectations also set the share of Under Armour negative pressure. The papers of the sporting goods manufacturer lost almost six percent to $8.16. In 2024, the company expects at most a slight growth in sales, while experts surveyed by Refinitiv had assumed growth of 3.7 percent on average. According to analysts, high inflation has encouraged customers to save. Under Armor does not enjoy the same loyalty as its competitors Nike and Lululemon, which were able to post strong quarterly figures despite the difficult economic situation.
On the other hand, it went steeply upwards for Novavax. The shares of the US biotech company jumped almost 28 percent. The corona vaccine manufacturer had announced that its corona/flu combination vaccination was safe and well tolerated in a mid-stage study. A forecast increase also drove the share of the US dialysis provider Davita on. The share certificates climbed by 12.9 percent.