Wall Street opens lower, frightened by the rise in bond rates

The floor of the New York Stock Exchange (GETTY IMAGES NORTH AMERICA/AFP/Jamie McCarthy)

The New York Stock Exchange opened lower on Monday, frightened by the irresistible rise in bond rates and the prospect of a new suspension of state services due to a budgetary impasse.

Around 2:05 p.m. GMT, the Dow Jones fell by 0.24%, the Nasdaq index was close to balance (-0.01%) and the broader S&P 500 index lost 0.09%.

“A certain lethargy has taken hold of the stock market, whose participants are exhausted by the rise in bond yields and the idea that the key rate (of the American central bank) could rise further,” commented, in a note, Patrick O’Hare, from Briefing.com

The yield on 10-year US government bonds thus rose on Monday to 4.53%, a first in almost 16 years, compared to 4.43% at the close on Friday.

This context weighed on stocks, which “are experiencing a decline”, which began several weeks ago, according to Sam Stovall of CFRA.

This is, according to him, “a moderate correction” which could see the market reduced by 5% to 10%, with the S&P 500 testing several major technical levels, namely 4,200 points, then possibly 4,000 points (it was at 4,318 points at 2:05 p.m. GMT).

However, the analyst sees Wall Street recovering during the last two months of the year. “We are not done with this bull market,” anticipates Sam Stovall.

Investors were also worried about the budget impasse in Congress, which could lead the American government to suspend part of its activities as of October 1, due to lack of sufficient funding.

A sign of renewed nervousness in the New York market, the VIX index, which measures market volatility, returned to heights more frequented for a month.

On the market, among the giant capitalizations of the technology sector, Amazon was doing well (+0.97%), after unveiling a major investment in the so-called generative artificial intelligence (AI) start-up Anthropic.

According to the Wall Street Journal, the Seattle group will immediately inject $1.25 billion and could increase its stake to $4 billion depending on certain criteria.

Only Netflix (+0.91%) benefited from the agreement in principle between the Hollywood screenwriters’ union and the studios, which must end a strike that began almost five months ago. Disney (-0.27%), Paramount Global (-0.95%) and Warner Bros Discovery (-1.44%) were all moving in the red.

HP was surviving despite Berkshire Hathaway, Warren Buffett’s holding company, selling 4.8 million shares of the computer maker last week, according to a document published Friday by the stock market regulator, the SEC.

Boeing (-0.78%) did not benefit from the order placed by Air Canada, which purchased 18 787-10 Dreamliner aircraft, the first of which must be delivered at the end of 2025. At the list price, the order represents approximately six billion dollars.

The Rite Aid pharmacy chain fell (-17.24%) after the Wall Street Journal reported discussions between the group and its creditors with a view to filing for bankruptcy. According to the daily, the Philadelphia company has proposed closing 400 to 500 branches as part of a backup plan.

© 2023 AFP

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