(CercleFinance.com) – Wall Street is moving lower on Tuesday in reaction to the appearance of new worrying economic signs, a trend which is accompanied by a visible deterioration in technical factors.
At the end of the morning, the Dow Jones dropped almost 0.8% to 33,743.5 points, while the Nasdaq Composite fell 1.1% to 13,119.4 points, confirming the break of 13,350 points.
After having broken through the thresholds of 4500 then 4400 points over the last two weeks, the S&P 500 – the benchmark index for American managers – today crossed the level of 4300 points downwards.
The S&P is also falling below its moving average of the last five days, a sign that the market’s upward trend could be in danger after the sharp rise recorded in the first half of the year.
As in the last ten days, volatility is also skyrocketing with a jump of 8% to over 18 in the CBOE volatility index – the famous ‘barometer of fear’ – which reflects growing nervousness.
After opening in the red, American markets quickly took a nosedive in the wake of the publication of an indicator confirming the darkening of the economic outlook in the United States.
US consumer confidence deteriorated much more sharply than expected in September, to 103, compared to 108.7 last month, reaching levels indicative of an upcoming recession.
The component measuring expectations fell to 73.7, compared to 83.3 in August, falling below the threshold of 80 points which traditionally suggests the occurrence of a recession within a year.
Concerns about the American budget are also weighing on Wall Street with the growing threat of a ‘shutdown’, that is to say a closure of the American federal administrations as of this weekend.
With only a few sessions scheduled between now and the fateful date of September 30, Congress has very little time to pass a government funding bill to avoid a shutdown before the start of fiscal year 2024 (October 1st).
While the American economy is currently facing several headwinds for the economy (resumption of student loan repayments, automobile strike, rise in gasoline prices), a government shutdown could have an economic impact severe.
Despite this less than reassuring context, government bonds are not playing their role as a safe haven and the yield on 10-year Treasuries recorded this morning a new peak since 2007 above 4.54%.
Market participants fear that this outbreak of fever will end up pushing the yield on the American 10-year bond towards the 5% threshold, a level considered critical.
On the foreign exchange side, the dollar continues to appreciate against the euro, which is sinking its most recent lows to now move around 1.0575, a lowest since last March.
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