An operator of the New York Stock Exchange (AFP/ANGELA WEISS)
The New York Stock Exchange opened lower on Monday as the market now fears it may have been too optimistic about the US central bank’s (Fed) monetary policy and already has its eyes on the intervention of its chairman, Jerome Powell , Friday.
Around 2:10 p.m. GMT, the Dow Jones dropped 1.28%, the Nasdaq index, 1.89%, and the broader S&P 500 index, 1.56%.
For Jack Ablin, of Cresset Capital, “the enthusiasm of the markets (between mid-June and mid-August) probably exceeded reality. And now, we are going back a bit”.
For the first time in several weeks, operators believe more in a rise of 0.75 percentage points at the next meeting of the Fed’s Monetary Policy Committee at the end of September, rather than half a point, which was the central scenario recently.
The renewed tension in the New York market was also seen in the VIX index, which measures market volatility and jumped more than 12% on Monday, the highest in almost three weeks.
“Investors are worried about the Jackson Hole symposium and fear to hear a more aggressive Fed,” said Jack Ablin, an unfavorable outlook for equity markets.
On the occasion of this annual meeting of central bankers and economists, which is held from Thursday to Saturday in Wyoming, the chairman of the Fed, Jerome Powell, must speak at 2:00 p.m. GMT on Friday.
“There is nervousness, as he is expected to act to contradict the idea that the Fed is at its peak” in terms of monetary tightening, “to restate its determination to raise interest rates. aggressive way to calm inflation,” according to Patrick O’Hare of Briefing.com.
This feeling was also reflected in the bond market, where the yield on 10-year US government bonds approached 3%, a threshold that it has not exceeded for a month.
Another indicator of this generalized tension, the dollar, a safe haven, had the wind in its sails, to the point of briefly returning above the euro.
“We are witnessing a reduction in the speculative excesses which had fueled the current rise this summer”, underlined Patrick O’Hare.
In the front line, the “same stocks”, these actions boosted by small holders, often unrelated to the financial health or the prospects of the company, such as GameStop (-5.10%), Bed Bath & Beyond (-6 .53%), and especially the AMC cinema chain (-33.16%).
The latter also suffered from the allocation of new shares to its existing shareholders, as a dividend, which mechanically diluted the number of shares and the value of the share, as well as from the announcement of its competitor Cineworld, which is considering a deposit of balance sheet.
Unsurprisingly, this bout of sobriety also affected technology and growth stocks. Not one of the technological heavyweights of the rating was spared, from Amazon (-3.29%) to Microsoft (-2.18%).
The rare groups to float were defensive stocks, therefore less sensitive to the economic situation, such as PepsiCo (-0.09%) or Procter & Gamble (-0.05%), both close to equilibrium.
“The general impression is that investors are waiting rather than supporting the market as they have done throughout the summer”, according to Patrick O’Hare.
The results season is coming to an end, but Nvidia and Salesforce are still expected this week and Wednesday.
Ford fell sharply (-5.60% to 14.99 dollars), after being sentenced on Friday by a Georgia court to pay $ 1.7 billion in damages. The jury found that a manufacturing defect in one of its pickups played a role in the deaths of two motorists in 2014.
The day was poor in macroeconomic indicators with, on the program, the only activity index of the Chicago branch of the Fed, which returned to positive in July after two months in the red, a new illustration of American economic activity which remains strong.
© 2022 AFP
Did you like this article ? Share it with your friends with the buttons below.
