(CercleFinance.com) – Wall Street signs lower Tuesday morning following statements by US Federal Reserve Chairman Jerome Powell appearing to be paving the way for future rate hikes.
A little over an hour after the opening, the Dow Jones fell 0.7% to 35,824.2 points, while the Nasdaq Composite dropped nearly 0.4% to 14,887.7 points.
The climate is cautious with the hearing of Jerome Powell before the Senate, during which the Chairman of the Federal Reserve reaffirmed the ‘hawk’ tone he has been using for several months.
In his opening statement, the Fed boss stressed that the US economy was growing at its fastest pace in many years and that the job market was ‘strong’.
‘We will use the tools at our disposal to support the economy and the robust labor market while preventing the upturn in
inflation to take root too much, ‘he warned.
Its posture seems to confirm the prospect of a first rate hike in March, followed by at least two other hikes this year, or even three if we refer to the latest projections from Goldman Sachs.
In the bond compartment, the easing movement in US rates is not sufficiently significant since the yield on ten-year Treasuries has only started to fall in the direction of 1.78%.
This level nevertheless remains higher than the highest observed at the end of March 2021 and close to two-year highs, that is to say since the appearance of the pandemic.
As inflation expectations become a central topic, market participants will follow with great interest tomorrow the latest inflation figures in the United States.
Traders know that data above consensus could lead to a further rise in government bond yields and rekindle fears about future rate hikes.
In addition, investors seem unwilling to commit too much before the start of the ‘season’ of quarterly results, which will kick off on Friday by banking giants JPMorgan Chase, Citi and Wells Fargo.
No important indicator is expected this Tuesday and the news of values is for the moment far from intense.
At this stage, it is mainly the changes in analysts’ recommendations that drive the rating.
IBM thus loose more than 3.5% in the wake of a degradation of UBS while Tesla nibbles 0.1% in favor of a target increase of Morgan Stanley.
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