Red signs for the weekend
Recession concerns weigh on Wall Street
September 15, 2023, 10:36 p.m
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The workforce at several US auto plants has stopped work. Some experts fear impacts on inflation and thus on the overall economy. Others consider the consequences to be manageable. Together with economic data without a clear direction, Wall Street is initially heading downwards.
The US stock markets ended the last day of the trading week with significant losses. Market participants explained the taxes with fears of recession. The strike in the US auto industry is perceived as a threat to the domestic economy, it said. There are also fears that a prolonged strike could drive up vehicle prices and thus inflation.
After the significant increases from the previous day, things went well Dow Jones Index down 0.8 percent. The broader one S&P 500 closed 1.2 percent lower, while the more technology-heavy Nasdaq Composite fell by 1.6 percent. Higher market interest rates weighed disproportionately on technology stocks, while the Great Decay may have increased overall volatility.
No clear direction on economic data
New US economic data contained light and shadow. Further rising yields on the bond market had a somewhat negative impact. However, encouraging economic data from China fizzled out. Industrial production there has recently developed better than expected, and retail sales have also risen more sharply than expected.
The day before, dovish statements from the European Central Bank had supported the stock markets. Also the successful stock market debut of the British chip designer poor on the Nasdaq was extremely well received by the market. The shares closed the day before around 25 percent above the issue price of $51. However, Arm were unable to escape the poor mood in the technology sector on their second day of trading and have now fallen by 4.5 percent.
On the economic side, business activity in the manufacturing sector in the New York metropolitan area rose more than expected in September and moved into the positive zone. Import prices, however, rose by 0.5 percent in August, slightly higher than the forecast. And industrial production increased more than expected in August, as did capacity utilization. Meanwhile, consumer sentiment deteriorated surprisingly significantly in September, as the corresponding index from the University of Michigan showed.
The trend on the foreign exchange market was dollar moderately lighter. The Euro was quoted 0.1 higher at around $1.0660 after the significant drops the previous day as a result of the ECB’s decisions. The Oil prices appeared friendly after the significant increases from the previous day. Recently, fears of a persistent supply gap had driven prices up.
The returns of the US bonds attracted something again. Observers pointed to the expectation that the US Federal Reserve would keep interest rates at a high level for a longer period of time. Yields could rise further if the U.S. auto industry strike lasts long enough to weaken the domestic economy, said Spartan’s Peter Cardillo. Further rising fuel prices would also push up market interest rates, he added.
Car values unimpressed
Adobe fell by 4.2 percent. Although the software company exceeded market expectations in the third quarter, the sales forecast for the fourth quarter was only within the consensus estimate.
While the strike by the US union United Auto Workers (UAW), which began on Friday, dampened the mood on the broad market, the shares of the affected car manufacturers showed their performance ford, General Motors and Stellantis more or less unimpressed by it. Observers explained this on the one hand with the hope that the strike would soon be over. Morningstar analyst David Whiston suspected that the market’s calm reaction could be due to the fact that initially only one plant at each of the three companies was affected.
Google has gotten over a legal dispute with the US state of California with a settlement. Allegations that the company violated California law by using location-based data from users were settled for a payment of $93 million. The shares of Google parent Alphabet closed 0.5 percent lower.
Apple gave in slightly and responded to the accusations from France about excessive radiation levels. The company has now announced a software update for the iPhone 12 in France. The ANFR radiation regulator announced this week that the device had too high radiation levels and threatened to recall it.
Disney advanced 1.3 percent. Disney is currently not planning to sell ABC television. Disney has not yet made a decision whether to sell ABC or other linear television assets, a company spokesman said. Bloomberg had previously reported that the company was in initial discussions with Nexstar Media about selling its TV channels, including ABC.