Dow Jones loses 2.8 percent
Fear of interest rates continues to have a grip on the stock market
04/22/2022, 11:45 p.m
In addition to the announcement by the US Federal Reserve that it will soon raise interest rates by half a percentage point, the consequences of the lockdown in Shanghai are also depressing the mood on Wall Street. A possible decline in Chinese demand is reflected in commodity prices.
The prospect of significant interest rate hikes by the US Federal Reserve is causing investors to retreat from Wall Street. Disappointing business figures from some companies are also weighing on the stock market. Of the Dow Jones lost 2.8 percent to 33,811 points. The tech-heavy one Nasdaq fell 2.6 percent to 12,839 points and the broad S&P 500 lost 2.8 percent to 4272 points. For the week, the Dow fell 1.85 percent, the S&P 2.75 percent and the Nasdaq 3.8 percent.
The most recent statements by US Federal Reserve Chairman Jerome Powell, who had signaled an increase of half a percentage point for May, had a particularly strong impact on the mood. “The market fears that the Fed is raising inflation fears too much and could cause corporate earnings to collapse going forward,” said Peter Cardillo, chief economist at investment firm Spartan.
In late trading, central banker Loretta Mester from the Cleveland Fed spoke out against an increase of 75 basis points, which would “shock” the markets. But she also announced her support for a rate hike of 50 basis points.
Lockdowns cloud economic prospects
In addition to the war in Ukraine, stockbrokers were concerned about the pandemic restrictions in China. “It was originally intended to be just a short lockdown for Shanghai,” said analyst Wenyu Yao from Bank ING. “Now it’s been over a month and nobody knows when it will end.” A possible drop in Chinese demand was reflected in commodity prices. The US crude oil variety STI fell 2.5 percent to $101.18 a barrel (159 liters). For the latter, however, this is only a short-term setback, analyst Stephen Brennock from brokerage house PVM Oil Associates pointed out. “An EU boycott of Russian energy supplies will inevitably lead to higher prices.”
One of the biggest losers in the US stock market gap with a price minus of almost 18 percent. Due to the weakening economy and problems with the Old Navy brand, the fashion company expects sales to fall by up to around 15 percent in the first quarter. So far, a minus in the high single-digit percentage range had been announced. However, he considers the current price losses to be a buying opportunity, writes analyst David Swartz from the research house Morningstar. Gap is far from getting into serious financial difficulties. In the wake of Gap, the shares of Abercrombie & Fitch, American Eagle, Urban Outfitters and the “Calvin Klein” mother PVH fell by a good nine percent.
at Verizon a cautious outlook overshadowed the surprisingly low loss of customers. The mobile operator expects earnings at the lower end of the targeted range of $5.40 to $5.55 per share for 2022. Sales will probably grow by nine instead of ten percent. Verizon works in a highly competitive market, wrote the analysts at research house Zacks. In addition to marketing expenses and discounts for customer acquisition, the costs for mobile radio frequencies are a risk factor for profitability. Verizon stocks fell 5.6 percent.
The papers from Kimberly Clark posted an increase of 8.1 percent. Thanks to strong demand, the supplier of “Kleenex” paper towels is aiming for a sales increase of two to four percent for 2022 instead of one to two percent. Analysts had feared a forecast cut because consumers could switch to cheaper no-name products.