Tuesday, November 23, 2021
Dow closes tighter
Possible rate hike scares investors
Wall Street will be split in two on Tuesday. The US yields continue to expand their previous day’s profits, from which financial stocks in particular benefit. For the technology sector, however, the signals are detrimental. The fall of the Turkish lira also caused turbulence.
The US stock exchanges failed to find a common direction on Tuesday. The US standard value index Dow Jones closed 0.6 percent higher to 35,813 points. The technology-heavy Nasdaq, however, lost 0.5 percent to 15,775 points. The broad S&P 500 gained 0.2 percent to 4690 points.
The prospect of a faster tightening of US monetary policy kept some investors off Wall Street. “It is conceivable that interest rates will be raised earlier than expected,” said Rick Meckler, partner at asset manager Cherry Lane. That is positive for banks, but negative for the other industries, especially the technology sector. Rising inflation and higher interest rates are devaluing future profits for these high-growth firms. Banks, on the other hand, wave higher profits from the traditional lending business when interest rates rise.
The speculation about interest rate hikes was fueled by the nomination of the former central bank chief Jerome Powell for a second term. This decision was more unfavorable for the stock market, said Benjamin Bente, managing director of asset manager Vates. The nomination of the central bank director Lael Brainard, who is also highly regarded for the post, would have been a signal for a longer-term loose monetary policy. “Powell will at least tighten the screws a little.”
Investors pulled back on US Treasuries in anticipation of a faster slowdown in Fed asset purchases. This drove the return on the ten year treasuries temporarily to a four-week high of 1.669 percent.
On the other hand, things went up for him Oil price, although the US wants to alleviate the supply bottleneck by releasing state reserves. Brokers criticized that oil companies would have to return the additional crude oil at a later date. In addition, the announced amount of 50 million barrels would have been sold under the recently passed debt reduction laws anyway. The US variety WTI rose 2.6 percent to $ 78.77 a barrel (159 liters).
Turkish lira nosedive
The biggest one also caused a stir The Turkish lira plunged for more than 20 years. The trigger for the panic sales was President Recep Tayyip Erdogan, who defended the notebank’s latest rate cuts and vowed to win his “economic war of independence” despite criticism. As a result, the dollar rose up to 18.6 percent to a record high of 13.4913 lira. The only way to stop the fall of the Turkish currency is an emergency rate hike, warned analysts at Bank Societe Generale (SocGen). Listed funds on Turkish stocks also fell under the wheels. The iShares ETF fell a good eight percent to a 13-month low of $ 19.07.
With the individual values Best Buy with a price drop of more than twelve percent caused a stir. The electronics trader’s shares were heading for the largest daily loss in eight years. Due to delivery problems, the company warned of a Christmas business below market expectations. It expects sales in the fourth quarter to be at the level of the same period in the previous year.
Increasing freight costs are also making the fashion companies Urban Outfitters as Abercrombie & Fitch to accomplish. The former presented mixed financial results, while the latter warned of lower margins for the current quarter. Urban Outfitters’ shares then fell nine percent. Abercrombie titles plummeted by more than twelve percent.