New York (awp/afp) – The New York Stock Exchange ended lower on Friday, with the three major Wall Street indices at their lowest level of the year at the end, a gloomy conclusion to a month of September marked by fear of a recession caused by sudden monetary tightening.
The Dow Jones fell 1.70% and concluded at its lowest level at the end of the session since the beginning of November 2020, at 28,725.51 points. The Nasdaq index lost 1.51%, to its lowest closing since July 2020, at 10,575.61 points, and the broader S&P 500 index fell 1.48%, to 3,585.62 points.
“Septembers are often bad for stocks,” said Christopher Vecchio of DailyFX.
“Since mid-August, the movement has been unidirectional, downward, with the exception of a rebound coming from a hope of a reversal of the Fed (American central bank)”, which was quickly showered, recalled Edward Moya of Oanda.
The freezing temperature that had already reigned in the markets for several weeks fell further on Friday with the publication of the PCE price index, the most followed by the Fed.
It emerged up 0.3% over one month in August, more than the 0.2% expected by analysts. Over one year, inflation reached 6.2%, ie more than the 6.0% forecast, but less than the previous month (6.4%).
“This report echoed the CPI index”, another major price index published in mid-September, “and reinforces the aggressive posture of the Fed”, estimated Sam Millette, of Commonwealth Financial Network.
Bond yields rose slightly, one more reason to justify the anxiety of investors, who have seen them rise inexorably for several weeks.
The yield on 10-year US government bonds stood at 3.81%, against 3.78% the day before.
However, investors noted that the inflation expectations of consumers surveyed by the University of Michigan for its monthly report showed a slowdown.
They now expect annual inflation to be 2.7% within 5 to 10 years, the lowest since April 2021. Matthew Martin, of Oxford Economics, also noted from this survey that “consumer pessimism (remained) at a historic level” in terms of the trajectory of economic activity over the medium term.
Investors also noted the increase in consumption in the United States, by 0.4% gross in August over one month and even by 0.1% corrected for inflation, the latter indicator being in line with expectations.
To the ambient gloomy and to the indicators of the day was added “the additional noise” generated by the transactions carried out for the last day of the month and the quarter, explained Tom Hainlin, of US Bank Wealth Management.
Many managers and institutional investors thus made portfolio adjustments, mostly unfavorable to equities.
“The problem for the market today is that the Fed doesn’t look like it’s ready to stop anytime soon but also that all these other risks have been brought to the fore,” said Christopher Vecchio, who was making reference to the intervention of the Bank of England on Wednesday to try to stabilize the British bond market.
Therefore, “people will probably feel uncomfortable about holding risky or long-maturity assets in the near future”, according to the analyst.
Technology stocks suffered another downpour, led by Apple (-3.00% to 138.20 dollars), which has just lost almost 9% in three sessions, weighed down by the downward revision of its sales forecasts for iPhone in the second half.
The sports equipment manufacturer Nike suffered (-12.81% to 83.12 dollars) despite the publication, Thursday after the stock market, of a turnover and a quarterly net profit above expectations. Among the downsides, the weak demand in China and the very high level of stocks, which force the comma brand to grant discounts.
The memory card maker Micron fell between the drops (+0.18% to 50.10 dollars) after reporting a higher than expected net profit for its quarter ended in early September. The group’s forecast for its current quarter nevertheless came out well below analysts’ projections, Micron citing a slowdown in demand and a “down cycle” for the sector.
The tobacco company Altria coughed (-1.92% to 40.38 dollars) after indicating that it was waiving the non-competition clause concluded with the specialist in electronic cigarettes Juul, in which it owns 35% of the capital.
The cruise line Carnival Corporation sank (-23.25% to 7.03 dollars), weighed down by a turnover much lower than forecast and a loss much heavier than expected, following the explosion of its costs. The group nevertheless indicated that reservations for 2023 were at a level higher than the historical average.
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