(Reuters) – The New York Stock Exchange opened lower on Wednesday on fears the Federal Reserve (Fed) will continue raising interest rates longer than expected this year to keep inflation under control.
Microsoft’s rise after the tech giant unveiled its artificial intelligence (AI) plans on Tuesday is helping to limit losses, however.
In early trading, the Dow Jones index lost 48.77 points, or 0.17%, to 34,097.37 points and the broader Standard & Poor’s 500 fell 0.45% to 4,145.57 points.
The Nasdaq Composite lost 0.66%, or 80.3 points, to 12,038.29 points.
According to Jerome Powell, the latest US employment figures released on Friday show that it will take time to bring inflation back to a level close to that targeted by the Federal Reserve (Fed), even if prices start to fall.
After a choppy session the previous day awaiting comments from the Fed Chairman, analysts see volatility unlikely to dissipate any time soon.
“Until we see a slowdown in inflation across the economy and around the world, it will be difficult to push markets higher decisively,” said Carol Schleif, chief investment officer. at BMO Family Office.
“Underlying concerns about the level of interest rates are rising to the surface, following yesterday’s exuberance at indications that disinflationary forces were setting in,” said Susannah Streeter, analyst at Hargreaves Lansdown.
Investors, she added, are now waiting for new data to shed new light on the direction of Fed policy.
On the political front, US President Joe Biden gave a State of the Union address to Congress on Tuesday evening, where he was particularly critical of oil companies’ record profits, listing economic proposals, including a minimum tax for billionaires and a quadrupling of the tax on corporate stock buybacks.
In stocks, Microsoft climbs 2.5% after the tech giant said on Tuesday night that it was revamping its Bing online search engine and Edge internet browser to include artificial intelligence (IA).
Activision Blizzard dropped 3.1% after the British competition authority warned that Microsoft’s proposed takeover of the video game publisher raised competition concerns.
Uber, which has set itself a target of turning a profit in 2023, climbs 6% at the open.
Also in corporate news, Manchester United are up 12.2% in response to news from the Daily Mail that Qatari investors are planning to make an offer to buy it.
Capri, owner of Michael Kors, lowered its full-year profit forecast on Wednesday due to a slowdown in demand, sending the stock down 22.9%.
Walt Disney and Mattel are due to release their results later on Wednesday.
(Written by Diana Mandiá, edited by Blandine Hénault)
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