(Boursier.com) — The New York Stock Exchange starts the week at half mast on Monday, weighed down especially by its technology stocks, while interest rates continue to tighten and the prices of Brent and WTI oil have fallen below $100 the barrel. The yield on the US 10-year bond rose above 2.78%, the highest since December 2018, on fears of rapid monetary tightening from the Federal Reserve in the face of the current surge in inflation.
Two hours before the closing, the Dow Jones lost 0.68% to 34,485 points, while the broad index S&P500 yields 1.2% at 4,430 pts and that the Nasdaq Composite, rich in technology and biotech stocks, fell 1.7% to 13,475 pts. Last week, the Dow Jones fell 0.3%, the S&P 500 dropped 1.3% and the Nasdaq fell 3.9%.
The big “technos” are continuing their correction, including Apple (-2%), Microsoft (-3.5%), Salesforce (-0.4%), Amazon (-1.7%) and Alphabet (-2.8%). You’re here loses 4% after reports that its Shanghai factory is idling due to coronavirus-related lockdowns.
On the economic front in the United States on Monday, traders will be able to follow the latest comments from several Fed officials. Thus, Raphael Bostic, John Williams and Charles Evans will speak during the day, while the American central bank has just launched its accelerated cycle of monetary tightening in order to fight against inflation.
Inflation will be discussed tomorrow Tuesday, with the consumer price index in the USA for the month of March 2022. The consensus is at +1.1% compared to the previous month and +8.4 % year-on-year. Excluding food and energy this time, the CPI is expected to be up 0.5% compared to February 2022 and 6.6% year-on-year. Tomorrow evening, investors will also be watching the fiscal balance for March.
The Fed is expected to unveil two consecutive half-point rate hikes in May and June to counter inflation, according to economists polled by Reuters, who also estimate a 40% probability of a recession in the States. United next year. While unemployment has fallen to historic lows, but inflation is at a 40-year high in the USA with soaring energy, commodity and food prices, observers therefore believe that the bank American central must act quickly.
According to this Reuters survey carried out between April 4 and 8 among more than 100 economists, the fed funds rate would therefore be raised to 1.25-1.50% at the end of the June monetary meeting. The overwhelming majority of economists expect an increase of 50 basis points in May and 56 of them on an equivalent increase in June. The Fed could then opt for more traditional increases of a quarter of a point in the second half, which would possibly bring the federal funds rate to 2-2.25% at the end of the year.
The risks are real, however, given the speed of the expected tightening. Economists estimate the probability of a recession in the United States at 25% within a year and 40% within two years. They therefore expect a further slowdown in rate increases in 2023, to a total of 50 basis points over the year. US inflation should not return to the 2% target before 2024. It should have peaked at 7.9% in the first quarter of 2022 and average 6.8% over the whole of this year. The unemployment rate should return to 3.5% next year on average and remain stable in 2024, according to these specialists.
Economists have finally adjusted their growth forecasts downwards, expecting GDP to increase by 3.3% this year and 2.2% in 2023.
VALUES TO FOLLOW
Goldman Sachs (+1%) announced the completion of the acquisition of NN Investment Partners from NN Group NV for 1.7 billion euros. NN Investment Partners will be integrated into Goldman Sachs Asset Management, with the company’s more than 900 employees joining the Goldman Sachs family and the Netherlands becoming an important site in Goldman Sachs’ European operations and a center of excellence for sustainability in investing in public markets. The acquisition brings Goldman Sachs’ assets under supervision to approximately $2.8 trillion and strengthens its position as one of the world’s top five active asset managers with leading franchises in fixed income, cash, equities, alternative investments and insurance asset management. It also brings assets under supervision in Europe to more than $600 billion, in line with the company’s strategic goals to grow its European business and expand its global reach.
Twitter (+1.6%). Elon Musk has decided not to join the board of directors of Twitter, announced the general manager of the social network at the blue bird, Parag Agrawal, in a tweet. The board of Twitter and Agrawal had however had many discussions on this subject. “We were enthusiastic about the idea of collaborating and aware of the risks,” added the CEO of the social media network in a brief message. Thus, the board of directors of Twitter had offered a seat to the richest man in the world, who has just acquired more than 9% of the shares. Musk’s appointment to the board was to become official on April 9, but the billionaire ultimately preferred to decline the offer. Agrawal adds that the group remains open to “inputs” from Musk. “There will be distractions ahead, but our goals and priorities remain unchanged,” said the CEO, adding that decisions remain in the hands of Twitter management.
Amazon (-1.7%) calls for a new vote by employees of a New York warehouse that approved the creation of the first union in the history of the group. The management of the company accuses the organization Amazon Labor Union of having influenced the ballot, reports Reuters.
Apple (-2%), the Californian giant from Cupertino, has launched production of the iPhone 13 in India, trying to diversify its sources of supply there.