New York (awp/afp) – The New York Stock Exchange ended lower on Thursday, the market getting used to the idea that the determination of the American central bank (Fed), which went up another notch on Wednesday, could to cause a recession.
The Dow Jones lost 0.35%, the Nasdaq index dropped 1.37% and the broader S&P 500 index lost 0.84%.
“Equity markets are struggling as they expect soaring rates to trigger a global recession,” Edward Moya of Oanda said in a note.
The strong impression left by the Fed on Wednesday was accentuated on Thursday by a wave of rate hikes by several other central banks, from the Swiss National Bank to the Bank of England.
After this brutal sequence, “what affects the market above all are the bond rates”, explained Quincy Krosby, of LPL Financial.
“Will the real economy be able to handle this rise in interest rates, which are so important to the average American?” she wondered.
On Thursday, the yield on 10-year US government bonds jumped to 3.70%, against 3.52% the day before, the highest since February 2011.
The 2-year rate, more representative of market expectations of the Fed’s monetary policy, rose to 4.15% for the first time since October 2007.
The so-called yield curve inversion phenomenon, which means that short-term rates are higher than long-term rates, continues to increase. It is often seen as a harbinger of an economic recession.
The positive spread between the 2-year rate and the 10-year rate has not been so high for more than 22 years.
Often jostled by these brutal inflections on the bond market, technology stocks have, for many of them, had a bad time this session, like Apple (-0.64%), Amazon (-1.04% ), Tesla (-4.06%) or Nvidia (-5.28%).
Meta (+0.49% to $142.82) was among the few to pull through, thanks to information from the Wall Street Journal that the parent company of Facebook and Instagram plans to cut costs by 10%, which will involve job cuts.
Another survivor, Microsoft (+0.85% to 240.98 dollars), whose general manager, Satya Nadella, said during an interview with the Bloomberg agency, confident in the finalization of the acquisition of video game publisher Activision Blizzard, announced in January.
Condemned to wait for new signs of economic slowdown and additional rate hikes, the market is even more gloomy than at the start of the week.
The S&P closed Thursday at its lowest since mid-July and is only a hundred points from its low for the year, recorded in mid-June.
“Unless there is significant positive corporate news or an easing of the 10-year rate, (…) the market could continue to fall back until it regains a footing,” warned Quincy Krosby.
On the stock market, the Novavax laboratory slipped again (-13.26% to 22.44 dollars), after a first slide on Wednesday, weighted by a lowering of the recommendation of analysts at JPMorgan, which follows the revision, which fell sharply , of the group’s turnover target, at the beginning of August.
The English football club Manchester United (+ 1.11% to 13.63 dollars), listed in New York, was not penalized despite the publication of a net loss of 115 million pounds sterling for its financial year 2021 / 22, due to an increase in its costs and lower revenues due to an aborted course in the Champions League.
The courier group FedEx pulled out of the game (+0.84% to 154.54 dollars) after the announcement, which occurred accidentally before the market closed, of an economy plan from 2.2 to 2, $7 billion annually.