monetary
New York (awp/afp) – The New York Stock Exchange opened sharply lower on Monday, tense by the persistence of inflation and the prospect of a possible tightening of the monetary policy of the American central bank (Fed), which pushed 10-year rates to an 11-year high.
Around 2:05 p.m. GMT, the Dow Jones fell 1.88%, the Nasdaq index, with a strong technological composition, dropped 2.92% and the broader S&P 500 index lost 2.46%.
The latter, considered the most representative of the American market, is now in a “bear market”, which means that it has lost more than 20% compared to its historic peak in early January.
“Fear is taking over,” commented Adam Sarhan of 50 Park Investments. “We are approaching the end of the month and the quarter, and there is still no favorable news for the market.”
“Last week, the market had the opportunity to regain momentum, but instead it fell again. It shows how weak it is,” continued the manager.
Investors continued to digest the publication on Friday of the CPI price index, which showed that inflation, far from slowing down as some predicted, accelerated in May, to register at 8.6% on a year, its highest level since December 1981.
The figure, which had already plunged the indices on Friday, raised fears in New York that the Fed has an even heavier hand than expected so far in terms of monetary tightening.
Operators thus now estimate at nearly 40% the probability that the American central bank will raise its key rate by 0.75 percentage points at the end of its meeting, which is held on Tuesday and Wednesday, which would be a first since 1994. .
Sign of the nervousness, the VIX index, which measures market volatility, jumped nearly 20% from Friday’s close.
“There’s a risk aversion movement going on,” Patrick O’Hare of Briefing.com said in a note.
On Friday, Wall Street was also taken by surprise by the monthly survey from the University of Michigan, which showed that consumer confidence had fallen in June to its lowest level in 70 years of existence.
“There is not much interest in risky assets”, but “there is not much interest in sovereign bonds either”, underlined Patrick O’Hare. “They are being sold in anticipation of higher rates and sustained inflation.”
The 10-year US government bond rate, which moves inversely to their price, hit its highest level in more than 11 years on Monday.
Shortly after the opening of Wall Street, the benchmark yield on US sovereign bonds rose to 3.29%, a high since May 2011, against 3.15% on Friday.
On the list, the most important valuations on Wall Street, almost all of them technology stocks, were pounded, like Alphabet (-2.60%), Amazon (-3.57%), Meta (-3 .55%) or Tesla (-5.06%).
The cryptocurrency sector was at its worst, caught in a wave of panic linked in part to the decision of the Celsius platform to suspend withdrawals from its customers.
The major listed players in the sector were cashing in, such as Coinbase (-14.46%) or Riot Blockchain (-13.05%), even companies that have engaged in cryptocurrencies such as PayPal (-4.68%) or Block ( -9.60%).
The logistics giant Prologis fell (-7.70% to 108.21 dollars) after the announcement of the takeover of the commercial real estate specialist Duke Realty (+0.61% to 50.08 dollars), for around 26 billion dollars, through an all-stock offering.
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