Dow Jones closes in the red
Wall Street takes another breather
10/19/2022 10:39 p.m
The US stock exchanges have to accept losses again after the gains at the beginning of the week. Stress comes from the bond market, where interest rates have risen significantly again after the most recent setback.
14-year high in US Treasury yields is putting renewed pressure on Wall Street after a two-day rally. At the same time, the balance sheet season with a mixture of positive and negative surprises is causing additional nervousness on the US stock exchanges. Of the Dow Jones Index lost 0.3 percent to 30,423.81 points. The tech-heavy one Nasdaq fell 0.9 percent to 10,680.51 points and the broader S&P 500 lost 0.7 percent to 3,695.16 points.
“The market is taking a breather,” said Peter Tuz of wealth manager Chase Investment Counsel. It is a combination of a post-rally pause and concerns about inflation and cautious outlook from some companies. At the same time, one longs for good news or other catalysts that could stop volatility, wrote analyst Konstantin Oldenburger from online broker CMC Markets. “It is the uncertainty as to whether yields in the USA will slowly but surely reach their high point and the stock market will be able to consolidate its still fragile ground in return, or in the end only the downward trend since the beginning of the year will continue.”
The US 10-year Treasury yield climbed to its highest level since July 2008 after data showed an 8.1 percent drop in housing starts in September – a sign the US economy is losing momentum. Technology stocks were correspondingly on a downward slide. The papers from Amazon and the Google parent alphabet fell by almost one percent. According to experts, rising inflation and higher interest rates will devalue the future profits of these high-growth companies. Concerns about the economy gave the world’s leading currency a fresh tailwind.
The dollar index, which tracks the rate against major currencies, rose 0.45 percent to 112.50 points. Oil prices, on the other hand, have largely stabilized. The US variety STI is now trading at $85.97 a barrel, up 3.4 percent after falling again the previous day. With the price leveling off between $80 and $85 in this way, the question arises as to how Opec+ assesses the market situation and whether further cuts could be considered, wrote market analyst Craig Erlam from brokerage house Oanda.
In view of the tense economic situation, investors are feverishly looking for relief in the form of surprisingly good group results. That’s how they laid Netflixtitle rose a good 13 percent after the streaming provider reported an increase in user numbers after three poor quarters in a row. The shares of the medical technology company Intuitive Surgical, the consumer goods group Procter & Gamble and the insurer Travelers also rose by up to 4.4 percent according to quarterly figures.
At the same time, corporations that do not meet expectations are severely penalized by the market. Abbott Laboratories shares fell 6.5 percent after disappointing results. Investors await the results of Tesla and IBM later Wednesday.