(CercleFinance.com) – The New York Stock Exchange opened lower on Friday morning, the day after a speech by Jerome Powell whose unaccommodating tone caused bond yields to rise sharply.
At the end of the morning, the Dow Jones dropped nearly 1.4% to 34,318.7 points, while the Nasdaq Composite fell 0.6% to 13,096.6 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 this 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 yesterday 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.
The chairman of the US Federal Reserve, Jerome Powell, did nothing to appease investors yesterday by hinting at a 50 basis point increase 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 the telecom operator Verizon, which fell by more than 6% at the start 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 is also on the downward path (-1.7%) after unveiling this morning a net profit down 6% to 2.1 billion dollars for the first quarter, i.e. a roughly stable EPS of 2 $.73.
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