Dhe US stock exchanges fell further on Monday in the face of increasing interest rate and recession concerns. Two days before the US Federal Reserve’s interest rate decision, market participants feared that the unexpectedly high inflation could persuade the monetary authorities to raise interest rates even more significantly. The shares of technology companies were once again under pressure: Their selection index Nasdaq 100 reached its lowest level since November 2020 and ultimately lost 4.60 percent to 11,288.32 points.
The market-wide S&P 500 closed after its lowest level since March 2021 with a minus of 3.88 percent at 3749.63 points. Compared to the record high in January, this also means a decline of well over 20 percent, which means that the stock market barometer signals a bear market according to the usual definition. The leading index Dow Jones Industrial lost 2.79 percent to 30,516.74 points. At times it was at its lowest level since February 2021 – the recovery in the second half of May fizzled out.
There is nervousness, “because in addition to the inflation dynamic, there are also signs of a decline in consumption. That would hit the economy twice and lead to economic downturns,” said Andreas Lipkow from the Comdirect. In addition, the burgeoning Covid issue in China is getting on nerves of investors.
“In New York there is (also) the fear that large-cap technology stocks such as Tesla and Apple, which from a technical point of view have not yet formed a trend reversal formation, will also turn around,” added market analyst Jochen Stanzl from broker CMC Markets.
On the other hand, the market strategists at the US bank JPMorgan around Marko Kolanovi consider the price slide of the past few days to be exaggerated. The significant losses and the “sell-off” in cryptocurrencies already more than adequately priced in a recession risk. The experts are counting on a positive surprise from the currency watchdogs and a price recovery in the second half of the year. This is supported by continued strong consumption, the economy being freed from the restrictions of the corona pandemic and economic stimulus measures in China.
They advise investors to focus primarily on stocks that are now comparatively low in valuations, such as particularly innovative companies, companies with a strong exposure to China, smaller companies and biotech.
Among the technology stocks that had been beaten anyway, Amazon stood out negatively on Monday with a price loss of almost five and a half percent. According to a media report, in a conflict with the EU competition authorities, the world’s largest online retailer has offered to limit the use of verb buyer data and improve the visibility of competitors’ products on the platform.
Cryptocurrencies under pressure
Tesla shares lost over seven percent, although another large US company, the electric car maker, announced a stock split to make its shares cheaper for small investors. Tech billionaire Elon Musk’s company announced on Friday after the US market closed that the board of directors would agree to a three-to-one split if shareholders approved it at the upcoming annual general meeting. Tesla had already announced in March that it was planning a split. But it was unclear in what proportion. Even an upgrade by the Canadian bank RBC, which now recommends the share as “Outperform”, did not help the price at the beginning of the week.