(CercleFinance.com) – Wall Street opened lower on Tuesday, investors still showing great concern about the evolution of bond yields, which arouses in them fears of a change in the stock market paradigm.
At the end of the morning, the Dow Jones fell 1.5% to 35,376.2 points, while the Nasdaq Composite dropped 1.6% to 14,660.9 points.
On the bond compartment, the yield on 10-year US Treasury bonds is rising sharply, around 1.85%, and is back to levels not seen since the start of the pandemic.
The bond market reflects fears surrounding the rise in inflation, which is leading investors to anticipate several rate hikes this year from the Federal Reserve.
Many strategists point out that this outlook is generally considered unfavorable to equity markets.
“Financial conditions will tighten as the Fed begins to withdraw liquidity from the financial system,” we warn at Columbia Threadneedle Investments.
‘We must therefore expect a widening of credit spreads and increased volatility’, underlines the American asset manager.
‘Risk assets will therefore be more vulnerable to shocks,’ he warns.
The teams at Columbia Threadneedle, however, believe that the central bank will have to be careful not to act too aggressively, as it could derail the economic recovery and lead to a recession.
In economic terms, the Empire State index, which measures activity in the manufacturing sector in the New York region, fell sharply by 33 points in January, to stand at -0.7.
On the values side, Goldman Sachs fell by 8% after announcing this morning a quarterly profit down 10%, well below expectations, the gains made in investment banking and wealth management activities having not made it possible to offset the downturn in market and asset management activities.
With a decline of 0.2%, Tesla outperformed the market thanks to an increase in the price target of Credit Suisse analysts, who forecast an increase in deliveries and the group’s margins by 2030.
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