Wall Street experienced another session of sharp decline on Monday, forgetting the frenzied optimism of the past two months to focus on the continuation of rate hikes from the American central bank (Fed) and a much-anticipated speech from its president on Friday.
The Dow Jones dropped 1.91% to 33,063.61 points, the Nasdaq index dropped 2.55% to 12,381.57 points and the broader S&P 500 index dropped 2.14% to 4,137.99 points. .
For Andy Kapyrin, of Regent Atlantic, the New York place has taken profits, which come following a hot summer and “before a week which should be quite risky for stocks and bonds”.
Calm on Monday in this regard, the week will be punctuated by a few important macroeconomic indicators, in particular the PMI activity indices for August on Tuesday, but also the PCE price index on Friday.
But the event of the week is obviously the speech on Friday by Fed Chairman Jerome Powell at the annual meeting of central bankers in Jackson Hole (Wyoming).
“This is an opportunity for the Fed to send a clear message to the markets”, namely that the institution “is always focused on inflation rather than economic risks”, estimates Andy Kapyrin.
Traders now favor a 0.75 percentage point hike in the Fed’s main interest rate at the next meeting of the Fed’s Monetary Policy Committee on September 21-22, following long expecting a half- point only.
This anticipated continuation of a forced march, never seen in the modern era, which would bring the key rate of the American central bank to its highest level in 14 years, weighed down technology stocks on Monday.
– Credit hardening –
Amazon (-3.62%), Tesla (-2.28%), Meta (-2.92%) and Alphabet (-2.58%) illustrated the tumble. Companies in the technology sector often have to borrow to fuel their growth and generally have a hard time with the tightening of credit conditions.
“I expect them to be abandoned as long as interest rates are relatively high”, explains Andy Kapyrin.
But the current cold snap is not limited to the technology sector and all members of the Dow Jones thus ended in the red on Monday.
Only a few defensive stocks, less sensitive to the economy, such as the health insurer UnitedHealth (-0.68% to 544.57 dollars), the highest weighting in the Dow Jones, floated a little.
“Nothing has changed on the macro level” compared to the situation in June, when Wall Street experienced its lowest of the year, argued Ross Mayfield of Baird. “I think we’re still in the right direction ‘on the equities side,’ but to justify the momentum we saw was perhaps a bit premature.”
On the stock market, the AMC cinema chain (-41.95% to 10.46 dollars) suffered from the allocation of new securities to its existing shareholders, as a dividend, as well as the announcement of its competitor Cineworld, which is considering filing for bankruptcy.
The title also suffered from the correction of the “same stocks”, of which it is a part, these actions praised, since the beginning of 2021, by small holders, often unrelated to the financial health or the prospects of the companies.
Ford fell sharply (-5.04% to 15.08 dollars), following being sentenced on Friday by a Georgia court to pay $ 1.7 billion in damages. The jury found that a manufacturing defect in one of its pickups played a role in the deaths of two motorists in 2014.
The manufacturer also announced Monday the elimination of 3,000 jobs, mainly in the United States, India and Canada.
