NEW YORK / LONDON (Agefi-Dow Jones) – The New York Stock Exchange closed on Thursday after a very volatile session amid the prospect of a tightening of monetary policy from the Federal Reserve (Fed ) continues to embarrass investors.
At the close, the Dow Jones (DJIA) index lost 0.5% to 36,236.47 points. The extended S&P 500 index lost 0.1% to 4,696.05 points. The Nasdaq Composite index, rich in technology stocks, lost 0.1% to 15,090.87 points.
In the bond market, the 10-year US Treasury bond rate continued to climb, gaining nearly 3 basis points to 1.73%. It had already climbed more than 5 basis points Wednesday, for its third session of rise in a row. The two-year rate, more sensitive to the Fed’s short-term rate policy, also rose by nearly 5 basis points to 0.875%.
On Wednesday, the restrictive tone of the minutes of the Fed’s December meeting had already weighed heavily on the technology compartment. The Nasdaq Composite index had experienced its largest drop since February with a decline of 3.3%. According to the minutes of the last meeting, Fed officials believe that the inflationary surge and tensions in the labor market in the United States could justify a more rapid hike in interest rates and a start of the reduction of the rate. central bank bond portfolio.
On Thursday, the Fed chairman of Saint Louis James Bullard came to reinforce this hypothesis by estimating that the American central bank could start to raise its rates as of its meeting in March because of the need to contain inflation. “The [Comité de politique monétaire] could start raising the key rate as early as the March meeting in order to be in a better position to control inflation, “said the central banker who will participate in the rate vote at the March meeting.
The minutes of the December meeting “broke the calm that reigned in financial markets at the start of the year,” said Jim Reid, strategist at Deutsche Bank. “The market has turned in a context of continuous rise in government bond rates,” he said. “There are still some important questions unanswered, including how many times the rates will be raised before the start of the reduction of the balance sheet” of the Fed, notes the strategist.
While equities can continue to advance despite the rate hike, as it remains a reflection of the economic recovery, stocks in the tech sector could be among the most vulnerable to rising yields.
“We could face a difficult situation,” said Lars Skovgaard Andersen, strategist at Danske Bank Wealth Management. The middleman expects the volatility to continue at least until tech companies start reporting results at the end of the month, which he says could prompt investors to buy back those stocks.
On the macroeconomic front, the number of American workers making a first application for unemployment benefit increased by 7,000 during the week ended January 1, to 207,000 in seasonally adjusted data, the department said on Thursday. American Labor. Economists polled by Dow Jones Newswires had expected a lower number of 195,000 jobless claims last week.
Activity in the service sector in the United States slowed down sharply in December after its record the previous month, in a context of a rebound in the Covid-19 epidemic, according to the survey published Thursday by the Institute for Supply Management (ISM). The ISM services index contracted to 62 last month, after hitting a new all-time high of 69.1 in November. Economists polled by the Wall Street Journal expected an index of 66.8 in December. At over 60, however, the index still shows robust activity in this sector, which accounts for more than three quarters of gross domestic product (GDP) and employment in the United States.
VALUES TO FOLLOW:
-Netflix lost 2.5% as JPMorgan lowered its price target on the stock from $ 750 to $ 725, estimating that the platform’s subscriber growth slowed in the fourth quarter and should be lower than planned for the first three months of the year.
-The National Commission for Informatics and Liberties (Cnil) in France announced Thursday that it had sanctioned Google (whose share of the parent company Alphabet lost 0.07%) to the tune of 150 million euros and Facebook ( of which the parent company Meta increased at the same time by 0.6%) to the tune of 60 million euros for non-compliance with the law on cookies.
-Walgreens (-2.9%) reported better than expected results and revenues in the last quarter and raised their financial guidance for this year, as demand for vaccines and tests boosted attendance at its drugstores.
-Wine and spirits producer Constellation Brands (-3.4%) posted higher-than-expected adjusted profit for the third quarter of its fiscal year, despite declining sales over the period. The group is targeting adjusted earnings of $ 10.50 to $ 10.65 per share for fiscal year 2021-2022, against a consensus of $ 9.89 according to FactSet.
-WarnerMedia, a subsidiary of AT & T (-0.4%), and ViacomCBS (-0.2%) are studying a possible sale of their television network CW Network, according to sources familiar with the matter. Nexstar (+ 1.1%), the largest owner of television channels in the United States, is among the candidates for the takeover.
-New York and London Office, The Wall Street Journal (French version Lydie Boucher, Jérôme Batteau) ed: ECH – LBO
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Dow Jones Newswires
January 06, 2022 16:27 ET (21:27 GMT)