Wall Street, yesterday 5 January in sharp decline (S&P -1.94%). Fed more aggressive against inflation
Also today, January 6, Wall Street should start a negative session, in the wake of yesterday’s collapse, in particular of the Nasdaq, which was influenced by the indications coming from the minutes of the last Fed meeting.
According to the experts of the American Central, inflation is proving to be higher and more lasting than expected and this may make it necessary raise interest rates sooner than previously estimated. Also for the FOMC it is necessary reduce monetary stimulus, no longer so necessary. Futures on Dow Jones yield 0.18%., those on the S&P 500 0.46%, on Nasdaq they lose 0.71%.
Wall Street in deep red with Fed, Nasdaq -3.3%
Closing in deep red for Wall Street on Wednesday 5 January after the release of the Fed minutes, which put pen to paper that inflation is proving to be higher and more lasting than estimated and how this could make it necessary to raise interest rates. interest ahead of schedule.
Tech stocks weighed on the entire market, with the exception of the Dow Jones, which ended up being dragged into the red as well. After a cautious start and in no particular order, immediately after the circulation of the minutes of the meeting in mid-December of Fomc, the operating arm of the Fed, there was a sudden collapse of the main indices. The minutes of the last meeting of the Fed’s monetary policy committee showed a willingness to tackle inflation head on.
The Dow – positive party – closed down 1.07% to 36.407.11 points, the S&P 500 fell by 1.90% to 4,702.30 points. But it was the Nasdaq, slipped to -3.34% to 15,100.2 points (the worst result since last February) because the hypothesis of an increase in interest rates sooner than expected combined with a probable strong tightening of monetary stimuli to tame the high inflation has caused the yield to jump Treasury at 10 years above 1.70%, to a maximum of nine months (from 1.666% yesterday).
Even the returns of the US government bonds at 30 and 2 years they increased, reaching 2.0874% and 0.8156% respectively. Already misled, the Nasdaq then collapsed. Fed members have indicated, in clear language, what they now mean increase the reference rate of the institution earlier and more times than expected. Furthermore, it is now time to start reducing the Fed’s balance sheet immediately after the first rate hike, which took traders by surprise.
“The market did not like this step”, commented the analysts of Briefing.com in a note. “The titles they have high multiples (share price versus earnings) usually take a hit when it looks like the Fed is about to raise rates, “said the management company’s investment manager. Bokeh Capital Partners.
This is the case with many titles they have recorded cheeky earnings in 2021, like Alphabet (-4.68%), Tesla (-5.35%), or Apple (-2.66%). The nuggets of the new economy introduced with great fanfare in 2021 were also affected, such as the online financial services company SoFi (-6.31%) and the virtual platform Roblox (-6.95%).
Even the star of cryptocurrencies and blockchain they took it for their rank, investors dropped, for example, Coinbase (-6.36%) and virtual currency mining company Riot Blockchain (-12.06%). Some rare stocks have withstood this nasty wind and allowed the Dow Jones to limit losses, particularly medical stocks such as Merck (+ 2.43%) e Walgreens (+ 0.97%).
“The market will sell massively for a few days, just enough time to digest” the Fed’s publication, commented Kim Forrest. Another star of the 2021 IPO promotion, electric vehicle maker Rivian (-11.22% to 90.01) has suffered the brunt of a series of announcements from its competitors.
There General Motors (-4.56% to $ 62.74) presented an electric version of its flagship pick-up, the Silverado, on Wednesday at Ces, the Las Vegas tech show. Stellantis also unveiled an important partnership with Amazon, which includes an order from the manufacturer for “thousands” of electric vehicles per year starting in 2023.
Rivian, which went public in mid-November, has so far based part of its popularity among investors on an order from Amazon for 100,000 electric vans. Excellent performance also for the shares of AT&T (+ 2.22% to $ 26.21), whose general manager communicated good phone subscription numbers and reported that the sale of WarnerMedia (controlled content) a Discovery (-1.12% at $ 26.45) is doing as expected.
San Francisco-based cloud computing firm also leaks Salesforce (-8.29%), Microsoft (-3.84%), Apple Sciences (-2.66%) and Nike (-2.49%).
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