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Wall Street: An increasingly bleak overall picture


(CercleFinance.com) – The New York Stock Exchange started the session in sharp decline on Thursday morning, concerns about the health of the American economy having regained the upper hand following the publication of disappointing indicators.

At the end of the morning, the Dow Jones dropped 1.5% to 30,562.6 points, while the Nasdaq Composite lost 2.1% to 10,939.1 points.

With a loss of more than 21% since the end of March, the heavily tech-weighted index has so far posted its worst quarterly performance since 2008.

Investors seem more and more convinced that US growth is slowing very seriously and are starting to see signs of recession almost everywhere in the world.

Stakeholders learned this morning that household consumer spending rose 0.2% in May from the previous month, a below-expected advance that shows US households are limiting their purchases amid soaring inflation .

In the labor market, weekly jobless claims fell only slightly last week to 231,000 from 233,000 the previous week, according to Labor Department figures.

Other indicators will tomorrow make it possible to begin to measure the impact of the slowdown that is beginning, in particular the ISM manufacturing index which should suffer from the persistent tensions on the production chains.

In the meantime, all global stock markets are impacted by fears of recession, with the pan-European Euro STOXX 50 index falling by more than 2%.

While volatility remains intense on the equity market side, it is flowing back significantly into the bond compartment.

On the American market, the yield on ten-year Treasury bonds has thus fallen towards the psychological threshold of 3%, in a climate of risk aversion which is pushing investors to seek refuge in long rates, which are deemed to be safer.

Significantly, the spread between the yield of two-year Treasuries and that of ten-year securities is now only four basis points, suggesting a possible inversion of the yield curve which is a major indicator of recession.

With concerns about growth, a barrel of US light crude (West Texas Intermediate, WTI) suddenly fell 3.8% to 105.5 dollars.

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