(CercleFinance.com) – The New York Stock Exchange ended sharply lower on Friday evening, the day after a speech by Jerome Powell whose unaccommodating tone caused bond yields to rise sharply.
At the end of the session, the Dow Jones dropped nearly 2.8% to 33,811 points, while the Nasdaq fell 2.55% to 12,839 points.
Investors remain concerned about the evolution of bond yields, which awakens in them fears of a slowdown in the American economy, or even of a possible entry into recession.
Private sector growth also decelerated significantly in April, according to the S&P Global composite PMI index, which came out on Friday morning at 55.1 in flash estimate, after 57.7 for the previous month. .
While US Treasuries yields are tending to fall back on the rates market, they are still moving close to their peaks since 2018.
The ten-year paper is currently at 2.8750% after a sudden reversal of steam on Thursday evening, which had taken it to 2.9340%, a level increasingly close to the psychological threshold of 3%.
The bond market reflects fears surrounding the expectation of more rate hikes from the Federal Reserve against a backdrop of soaring inflation.
US Federal Reserve Chairman Jerome Powell did nothing to appease investors on Thursday by hinting at a 50 basis point hike in the institution’s key rates as early as next month.
US equity markets have enjoyed a prolonged period of low volatility and steady gains over the past few years, but Wall Street could become more volatile with the prospect of an aggressive hike in key rates.
The current market valuation could however constitute a protective factor. The S&P 500 index’s PER is currently 19.5, a level close to its long-term average of 18.6, according to FactSet data.
The trend is also weighed down by disappointing quarterly results, particularly for telecom operator Verizon, which fell nearly 6% at the end of the session.
The group published performance slightly above expectations for the first quarter, but announced that it expects a profit for 2022 at the bottom of its forecast range.
American Express also ended down (-2.7%) after unveiling Friday morning a net profit down 6% to 2.1 billion dollars for the first quarter, or a roughly stable EPS of 2.73 dollars.
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