WALL STREET OPENS LOWER, BOND YIELDS UP
PARIS (Archyde.com) – The New York Stock Exchange opened lower on Monday as rising bond yields weighed on stocks amid fears of accelerating monetary tightening in the United States and an economic slowdown in China.
In early trading, the Dow Jones index lost 393.42 points, or 1.2%, to 32,505.95 points and the broader Standard & Poor’s 500 fell 1.3% to 4,065.83 points.
The Nasdaq Composite, which on Friday recorded a fifth consecutive week of decline, the longest weekly series of losses since the fourth quarter of 2012, still yields 1.4%, or 179.61 points, to 11,965.05.
The index, rich in technology stocks, is suffering from rate hike expectations. After a 50 basis point hike in US Federal Reserve rates last week, most traders expect a further 75 basis point rise in the cost of credit at the central bank’s June meeting in the face of runaway inflation. .
US consumer price data for April will be released on Wednesday.
“The markets are focused on long-term interest rates. The higher they rise, the more they fear a recession or stagflation,” explains Christopher Grisanti, equity strategist at MAI Capital Management.
“The fear has become so great that we get rid of everything, including the baby with the bath water as the saying goes,” he adds.
Against this backdrop, Chinese economic data released on Monday only served to heighten risk aversion. The country’s exports slowed markedly in April to their slowest pace since June 2020 (+3.9% year on year), while imports remained stable, as health measures linked to the resurgence of COVID-19 caused disruption of production at factories, disrupted supply chains and led to a drop in domestic demand.
In values, digital giants such as Microsoft, Amazon.com, Apple, Alphabet, Meta Platforms and Tesla fell 1.5% to 4.5%. The index of the high technology sector lost 1.6%.
The yield on ten-year Treasury bills is advancing parallel to 3.12%, following hitting a session high since November 2018 at 3.2%.
This does not benefit banks, with Morgan Stanley shedding 1.5% and the sector index 1.2% amid a flattening yield curve, with the five-year Treasuries yield (3.007%) virtually the same. level than that of ten years.
On the upside, the cosmetics manufacturer Coty took 1.3% thanks to the increase in its annual profit forecast.
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(Written by Claude Chendjou, edited by Jean-Michel Bélot)