Wall Street extends loss
US investors remain highly nervous
05/06/2022 10:24 p.m
The brief relief following the Fed interest rate announcement has fizzled out completely. At the end of the week, skepticism reigns on Wall Street. The indices go up and down and remain under the spell of fears of inflation.
After the highest daily loss since 2020 the previous day, Wall Street extended the slide on Friday. However, the sales did not reach the momentum of the previous day. Concerns about the economy persisted and weighed on share prices. The distrust as to whether the US Federal Reserve will be able to curb the extremely high inflation without choking off growth has risen noticeably, it was said in the trade. Traders therefore spoke of stagflation concerns.
On the one hand, there was hope that rate hikes would be strong enough to tame rapidly rising inflation. On the other hand, there were growing concerns that the tightening of monetary policy could slow down economic growth. Of the Dow Jones Index lost 0.3 percent to 32,901 points, S&P 500 and Nasdaq Composite lost 0.6 and 1.4 percent respectively. A total of 971 (Thursday: 381) price winners and 2328 (2942) losers were counted on Wall Street, and 101 (93) titles closed unchanged.
“The market is trying to gauge whether central banks are more concerned about inflation or about dampening growth, and the market has clearly decided they are more concerned about inflation,” said State Street Global Advisors investment strategist Altaf Kassam . “If the Fed wants to fight inflation at all costs, then that will certainly have an impact on stocks.”
The US job market report also failed to allay concerns, although job creation surprised to the upside and hourly wages rose more slowly, which only moderately dampened fears of inflation, but did not in any way alleviate them.
Oil Prices Rise – Dollar Slightly Sheds
The again increased oil prices did not really fit into the gloomy economic environment. Here, the potential impact of an EU embargo on Russian oil imports provided support. The supply is becoming scarcer for the states that rejected Russian oil. That drives up the prices, they said. “The EU and its allies, including the US, South Korea and Japan, account for around two-thirds of current Russian crude oil and refining exports, and buyers in these markets will be difficult to replace,” Fitch Solutions said. The analysts predicted that Brent will average $100 a barrel this year. However, they pointed out that the risks are to the upside. In addition, there were renewed reports that the US government wanted to replenish its strategic oil reserves, after dumping parts of them on the market to lower prices.
After dollar rally the day before, the greenback edged back, the dollar index fell 0.2 percent. However, given the Fed’s rate hike plans and weak growth in Europe and China, the dollar is likely to be hedged down, it said. Of the Euro recovered significantly after a brief setback to below $1.05. Statements by ECB Council member Robert Holzmann from the previous day could also have had an impact here. He had joined the growing chorus of monetary policymakers and hinted at an imminent rate hike in June. Most recently, expectations for an initial increase had already been pushed forward, but only for July.
The returns on US bond market continued to rise with the prospect of sharply rising interest rates. The US 10-year Treasury yield rose more sharply from the key 3 percent mark and climbed to its highest level in almost three and a half years. Of the gold price made up for the previous day’s losses with the slightly more leisurely increase in hourly wages because inflation expectations fell accordingly.
Under Armor numbers and outlook under pressure
The sportswear manufacturer Under Armour was in the red in the first quarter due to higher freight costs. The group also disappointed with the annual forecast and warned of higher shipping costs and other inflationary influences. The share price collapsed by 23.9 percent – Nike fell by 3.5 percent.
Peloton Interactive fell 7.7 percent. The fitness company is apparently looking for investors and, according to sources, is considering selling a larger minority stake.
The contact lens manufacturer Bausch & Lomb ventured onto the trading floor. According to regulatory disclosures, Bausch & Lomb originally pursued a price range of $21 to $24, but then set the issue price at $18. The stock closed around 11 percent higher at $20.