US stock exchanges slightly in the red: record hunt on Wall Street interrupted

US stock exchanges slightly in the red
Record hunt on Wall Street interrupted

First, the records continue on Wall Street. But then interest rates rise across the board. That means tailwind for bank stocks. The Boeing share, however, loses.

The mood on the US stock exchanges deteriorated somewhat in the course of trading after the leisurely record hunt of the past few weeks had initially continued with new all-time highs for the Nasdaq indices and the S&P 500 index. Stronger rise in market interest rates caused disruptions in the course of trading.

The reason for this was a significantly stronger than expected increase in US consumer prices in June. Although interest rates initially did not react, it was a disappointing auction of 30-year US bonds, which resulted in unexpectedly high yields, but later ensured that interest rates continued to rise across the board.

The Dow Jones Index In view of the continuing positive mood, it only went out of trading with a small minus of 0.3 percent and 34,889 points, although it was still slowed by heavyweight Boeing and losses in bank stocks. The S&P 500 index yielded by a similar magnitude, the technology-heavy one Nasdaq Composite Likewise.

S&P 500 4,370.21

According to initial information, 831 (Monday: 1857) course winners and 2513 (1461) losers were counted on the Nyse. 124 (131) titles closed unchanged.

On the bond market, the ten-year yield rose 5 basis points to 1.41 percent. The height inflation increases the pressure on the US Federal Reserve, possibly earlier than previously expected to switch to a more restrictive monetary policy stance and possibly also to raise interest rates. Most recently, the central bank had announced the first rate hikes for 2023, but individual US central bankers had already brought this into play in 2022.

In this situation, which was positive for him, the U.S. dollar clearly too. The dollar index rose 0.5 percent and the euro slipped from a level of 1.1850 US dollars before the inflation data to 1.1777 most recently.

Bank stocks limit losses

Goldman Sachs
Goldman Sachs 318.00

For Bank stocks the development in interest rates meant a tailwind, because a higher interest rate level is favorable for the credit margins of the financial institutions. The S&P 500 banking index had initially lost over 2.0 percent and ultimately went 1.6 percent lower from the day. At the top of the sector indices were technology and software with gains of up to 0.9 percent.

With JP Morgan and Goldman Sachs, two major banks had opened the quarterly reporting season. Goldman Sachs fell 1.2 percent, although revenues and profits rose faster than expected. One downer, however, was the significant decline in earnings in equity and bond trading. JP Morgan became cheaper by 1.5 percent. Although the bank exceeded its profit expectations, earnings fell, among other things because income in the trading business fell significantly.

Again problems at Boeing

Boeing 228.20

The Boeing-Share lost 4.2 percent. The aircraft manufacturer had lowered the targets for the delivery of the Dreamliner 787 after a production error was discovered. This also dragged down the prices of suppliers such as Spirit Aerosystems (-4.1%) and Howmet (-2.9%).

Surprisingly strong numbers came from the beverage manufacturer Pepsico, which also increased the outlook. The share gained 2.3 percent.

The payment service provider’s share Affirm Holding (-10.4%) suffered from a Bloomberg report that Apple (+ 0.8%) and Goldman Sachs are working on a similar “buy now – pay later” concept for payments via Apple Pay.

The Oil prices rose by up to 1.8 percent after the International Energy Agency (IEA) forecast that oil supply will not keep pace with demand. In addition, traders spoke of speculation that the weekly inventory data on Wednesday should show the eighth decline in a row.