2023-12-21 00:24:06
Losses following records on the US stock market
In view of the recent record hunt on the US stock exchanges, investors took profits on Wednesday. The most important stock indices closed significantly in the red.
Investors fear an economic downturn and nervousness is evident. (archive image)
IMAGO/NurPhoto
The leading index Dow Jones Industrial and the Nasdaq 100, which is predominantly made up of technology stocks, had initially dragged themselves to further highs, but investors’ nervousness increased noticeably in late trading. There are fears of an economic downturn. The VIX index, which measures the intensity of fluctuations on the stock exchanges, had now jumped to its highest level since the end of November.
In the end, the Dow fell by 1.27 percent to 37,082.00 points. The market-wide S&P 500 lost 1.47 percent to 4,698.35 points. The Nasdaq 100 fell by 1.53 percent to 16,554.16 points.
Support initially came from the bond market, where the yield on ten-year US government securities remained below the widely respected four percent mark. Investors are still betting on significantly falling interest rates in the coming year, and the stock markets are actually benefiting from this. According to the Fedwatch tool from the Chicago Mercantile Exchange, the market expectation of a first interest rate step in March is currently over 80 percent.
Freight costs are increasing
As trading progressed, investors increasingly asked themselves whether falling interest rates might also be a sign that the US economy was faltering. The declining profits of the logistics group Fedex increased concerns regarding an economic downturn, as the current high level of interest rates is likely to weigh on the economy with a certain delay before improvement is in sight. Fedex is widely viewed as an indicator of the US economic outlook.
Recently, investors have also begun to weigh the risks posed by possible shipping delays and increases in freight costs. The background is that shipping companies are diverting their cargo from the Red Sea to avoid attacks by the Iran-backed Houthi militias.
At the end of the S&P 500, Fedex shares fell by twelve percent. The company had disappointed investors with its business development and statements regarding the coming year. Analyst Jordan Alliger from Goldman Sachs particularly criticized the profitability of the express business.
Expert Brian Ossenbeck from JPMorgan Bank added that Fedex’s statements allowed predominantly negative conclusions to be drawn regarding its competitor UPS. Fedex pointed to weaker demand in the international freight business. UPS shares fell almost three percent.
Euro gave way
The euro fell slightly and was trading at $1.0939 at the close on Wall Street. The Dutch central bank chief Klaas Knot spoke out once morest rapid interest rate cuts in the euro area. The European Central Bank set the reference rate at 1.0944 (Tuesday: 1.0962) dollars. The dollar therefore cost 0.9137 (0.9122) euros.
On the US bond market, the futures contract for ten-year government bonds (T-Note Future) rose by 0.42 percent to 112.91 points. In return, the yield fell to 3.85 percent.
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