Fear of recession: US investors continue to hold back

fear of recession
US investors continue to hold back

Fear of a recession spoils investors’ mood on Wall Street. Things are no better in the technology sector. Reason are the planned layoffs at Microsoft and Amazon.

Recession fears pushed the US stock markets back into the red. the Dow Jones Index the standard values ​​closed 0.8 percent lower at 33,044 points. The tech-heavy one Nasdaq gave way one percent to 10,852 points. The broad one S&P 500 lost 0.8 percent to 3898 points.

Nasdaq Composite 10,852.27

The latest economic data showed a slowdown in the US home construction business – even if it was a little less pronounced than analysts had feared. “The housing market is in recession,” said Edward Moya, market analyst at brokerage firm Oanda. Meanwhile, initial jobless claims fell surprisingly. Investors had hoped that a cooling labor market would prompt the US Federal Reserve to make smaller interest rate hikes.

“At the same time, corporate earnings look weak and point to a recession,” said Sam Stovall, chief investment strategist at research firm CFRA in New York. “Corporate earnings are expected to decline in the fourth quarter of 2022 and the first two quarters of 2023.”

Oil prices rise slightly

A speech by Fed Vice President Lael Brainard, on the other hand, was well received by stockbrokers and limited the price losses somewhat. The chances of a soft landing for the economy appear to be increasing, said Fed Chair Jerome Powell’s deputy. A recession could possibly be avoided. However, data pointed to subdued economic growth this year. Investors are now waiting for the figures from the streaming provider Netflix, which are planned after the US stock market close. The financial report is considered the first mood test for the technology industry in the current accounting season.

Amazon
Amazon 93.68

Oil prices, meanwhile, recouped their losses from the morning session. The North Sea variety Brent rose 1.4 percent to $86.19 a barrel (159 liters). The price of US light oil STI gained 1.1 percent to $80.38. The International Energy Agency (IEA) considers it possible that there will be bottlenecks on the energy markets in 2023. “If the Chinese economy recovers this year, which many financial institutions expect, demand could be very strong and put pressure on the markets,” said IEA chief Fatih Birol at the Reuters Global Markets Forum in Davos. At the same time, there are many question marks about Russia’s ability to export because of the sanctions imposed by the West.

Microsoft and Amazon on the decline

In the case of individual values, investors got out of large technology groups. The software developer Microsoft announced on Wednesday that it would cut 10,000 jobs after cutting 1,000 jobs in October. Also the online retailer Amazon plans to lay off thousands of employees in the US, Canada and Costa Rica. The shares of the tech giants fell by 1.6 and 1.9 percent respectively. The bleak prospects for companies were depressing Alcoa. The aluminum maker’s shares fell 7.4 percent. The group expects total alumina shipments to decline this year.

Phillip Morris
Phillip Morris 93.88

At the same time, a buy recommendation drove the Phillip Morris-Share on. The titles of the provider of MarlboroCigarettes rose 1.9 percent on Wall Street to $101.19. The European tobacco tax directive should be more favorable for the company than previously assumed, wrote experts at the US investment bank Jefferies, and put the title on “buy” from previously “hold”. The target price was also raised to $118 from $86.

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