The New York Stock Exchange showed mixed results on the 16th (Eastern time) as market participants feared a possible US recession. Technology stocks closed lower on concerns regarding rising interest rates, while energy stocks rose sharply as oil prices rose more than 3% on expectations that Chinese demand would recover.
Technology stocks fall on fears of a recession… Energy stocks strong
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On the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 32,223.42, up 26.76 points (0.08%) from the previous day.
The Standard & Poor’s 500 Index closed at 4,008.01, down 15.88 points (0.39%) from the battlefield, and the Nasdaq Index, centered on technology stocks, closed at 11,662.79, down 142.21 points (1.20%) from the battlefield.
The Dow fell 12.8% from its peak in January and the S&P 500 fell 16.8%. The Nasdaq Composite fell 28% from its peak in November last year, entering a bear market.
Among the 11 sectors of the S&P 500, △Energy 2.62% △Consumer staples 0.45% △Healthcare 0.69% △Utilities 0.33% recorded an upward trend. On the other hand, △Consumer discretionary goods -2.12% △Finance -0.78% △Industry -0.17% △Raw material -0.19% △Real estate -0.8% △Tech stocks -0.91% △Communications services -0.59%.
Technology stocks acted as an obstacle to the share price rise. Cloud companies, including Datadog, Cloudflare, and Atlassian, fell 10.7%, 13.6% and 6.3%, respectively. Shares of electric car maker Tesla fell 5.9%.
Concerns over slowing US economic growth, aggressive rate hikes by the US Federal Reserve (Fed) and soaring inflation dampened investor sentiment.
“U.S. Treasury yields continued to move higher in anticipation of higher inflation and an aggressive Fed move,” Bill Nolsey, senior investment director at U.S. Bank Wealth Management, told CNBC.
U.S. Treasury yields are on the rise. The yield on the 10-year U.S. Treasury bond stood at 1.5% at the beginning of this year, but stood at 2.9% today.
However, some analysts, such as Citi analyst Scott Cronat, advised that the stock price decline might be an attractive entry point into the market from a long-term perspective.
On the other hand, strategists at RBC Capital Markets said in a memo today that the S&P 500 is at a crossroads as it struggles to bottom out.
In the S&P 500, the energy sector led the gains, up 2.6%. Occidental Petroleum was the best-performing energy stock on the day, up nearly 5.7%. Marathon oil rose 3.6%. U.S. oil prices soared regarding 3% on hopes that China will be able to recover from the economic downturn caused by the coronavirus, and related stock prices also rose.
Eli Lilly is up 2.7% and Pfizer shares are up regarding 1.5%.
In addition, the share price of Spirit Airlines rose 13.5% as ultra-low-cost airline JetBlue Airways took over Spirit Airlines hostilely.
European stock markets ended lower.
The pan-European Euro Stoxx50 index fell 0.49% to 3,685.34.
The DAX index of the Frankfurt Stock Exchange in Germany closed at 13,964.38, down 0.45% from the closing price of the previous trading day, and the CAC40 index of the Paris stock market in France, down 0.23% to close at 6,347.77.
The London Stock Exchange’s FTSE 100 index rose 0.63% to 7,464.80.
Oil prices soared more than 3%
On the New York Mercantile Exchange on the same day, the price of West Texas Intermediate (WTI) for June contract finished trading at $114.20 per barrel, up $3.71 (3.4%) from the previous day.
The price of June Brent crude on the London ICE Futures Exchange rose by $2.90 (2.4%) to $114.24 per barrel.
Oil prices rose on expectations that China’s demand would revive.
Shanghai Municipal Deputy Mayor Chu Ng-min announced that from this day on, the city plans to open Shanghai in three phases, and from June 1 to mid-June, normal activities of the entire city will be fully restored.
However, 46 cities in China are currently closed, affecting shopping, factory output and energy use, CNBC reported.
“There are signs that demand is recovering in the region (China), supporting higher oil prices,” Mizuho’s director Bob Yager told CNBC.
Due to the coronavirus lockdown, China processed 11% less crude in April. Daily throughput is the lowest since March 2020.
U.S. gasoline futures prices hit an all-time high today on fears of declining stockpiles.
“As US gasoline prices continue to rise, oil prices, especially WTI prices, will remain strong,” said Kazuhiko Saito, chief analyst at Fujitomi Securities Co., Ltd.
In addition, optimism that the European Union (EU) will implement a phased embargo on Russian oil has also raised oil prices.
Austrian Foreign Minister Aleksandr Schalenberg said he expects the EU to agree on sanctions. German Foreign Minister Annalena Verbock also said the EU would need a few more days to reach an agreement.
Naohiro Nimura, of Market Risk Advisory, told CNBC, “In conjunction with the EU’s plan to ban Russian crude, the Oil Export Organization (OPEC) will only slightly increase production, and the oil price is expected to remain at the current level of close to $110 a barrel.”
- reporter information
- Yoon Joo-hye
- [email protected]
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