Traders fear recession
Poor consumer sentiment weighs on Wall Street
06/28/2022, 10:54 p.m
After initial price gains, the US stock exchanges came under strong pressure on Tuesday. The latest data on US consumer sentiment is sparking recession fears among retailers. Technology stocks in particular are making significant losses.
Weak US consumer confidence caused Wall Street to fall sharply on Tuesday. The index slipped to its lowest level since February 2021. The sub-indices for assessing the current situation and for expectations also fell. This increased fears that the US Federal Reserve would take a harsher stance in the coming interest rate hikes and a possible recession. This means that the initial strong gains, triggered by the decision to relax the corona virus in China, could not be maintained.
Of the Dow Jones Index lost 1.6 percent to 30,947 points after having reached 31,885 points for the day. Of the S&P 500 fell by 2.0 percent and the Nasdaq Composite fell 3.0 percent. Investors continued to fluctuate between fears of inflation and fears of recession, it said. As a result, concerns continued to revolve around how aggressively the US Federal Reserve will hike interest rates given the threat to the economy. In addition, there were increased position adjustments at the end of the quarter.
US Fed President John Williams predicts growth in the US economy will slow. This is necessary to cool down inflation. However, he assumes that a recession can be prevented, he said in an interview with CNBC. Williams added that the next Fed meeting will discuss whether to raise interest rates by 50 or 75 basis points.
“The question is when will we bottom out and when will the tipping point come, and it’s not necessarily instantaneous,” said Eloise Goulder, head of global markets equities trading at JPMorgan Chase. “For me to be optimistic for the second half of the year, we need to see that inflation has peaked and the data is stabilizing,” she adds.
Nike by numbers lighter
The sporting goods manufacturer Nike exceeded expectations in the fourth fiscal quarter despite a decline in sales and earnings. The company also announced an $18 billion share buyback and provided an upbeat outlook. The price nevertheless fell by 7.0 percent. In retail, reference was made to increased inventories and bottlenecks in the supply chain.
US bank shares fared better than the market as a whole. The papers from MorganStanley gained 0.9 percent. The titles of Goldman Sachs and Wells Fargo lost only 0.4 and 0.1 percent respectively. After the institutes have passed the US Federal Reserve’s annual stress test, dividends will be raised. Goldman Sachs and Wells Fargo each want to increase this by 20 percent, with Morgan Stanley it is 11 percent. Morgan Stanley also announced a share buyback program of up to $20 billion.
JP Morgan Chase & Co plans to keep the third-quarter dividend at $1 per share as the bank needs to allocate more capital to complete its annual stress test. The titles lost 0.5 percent.
The shares of Spirit Airlines increased by 1.1 percent. JetBlue Airways (-0.3%) has increased the bid for the airline. Only the day before, the company had decided to accept the takeover bid from Frontier Group Holdings. Spirit shareholders are scheduled to vote on the bids at an extraordinary general meeting on Thursday.
Oil prices continue to rise
The dollar recovered from the recent levy dollar index increased by 0.6 percent. Of the Euro on the other hand, fell more clearly below the $1.06 mark. Commerzbank analyst You-Na Park-Heger said it would be difficult for the euro to continue gaining as concerns weighed on sentiment that the global economy could weaken. In addition, the risk of an energy crisis remains.
the oil prices rose to their highest level since mid-June, gaining as much as 2.4 percent. The decision to relax China fueled speculation about higher demand for raw materials, it said. In addition, there were doubts about the ability of Saudi Arabia and the United Arab Emirates to significantly increase their production. In addition, the G7 continue to consider how Russian oil and gas production can be curbed.
Of the gold price fell to its lowest level in about two weeks. Concerns about interest rate moves by the US Federal Reserve to curb inflation, which were expected to be stronger than previously expected, put pressure on the interest-free precious metal, it said.