2023-10-12 20:25:47
The New York Stock Exchange reversed course on Thursday and finished in the red following the announcement of higher-than-expected US inflation which pushed up bond yields and put stocks at a disadvantage.
The Dow Jones index lost 0.51% to 33,631.14 points, the technology-heavy Nasdaq lost 0.63% to 13,574.22 points and the S&P 500 fell 0.62% to 4,369.61. points.
Wall Street initially opened in the green but changed direction following digesting the news of more stubborn inflation than expected.
Price increases remained at 3.7% year-on-year in September, according to the CPI index published by the Labor Department. This rate disappointed analysts, who were expecting a slight slowdown, to 3.6% over one year, according to the MarketWatch consensus.
Over just one month, however, inflation slowed for the first time since May, to 0.4% – more than expected nonetheless – compared to 0.6% in August.
The turnaround in the indices, which have lined up positive sessions since Friday, “happened because of inflation and interest rates,” explained Jack Ablin, investment strategy specialist at Cresset.
“Inflation was above expectations and the yield on ten-year Treasury bonds rose by five basis points,” summarized the analyst. However, he thinks that this inflation figure is not strong enough “to change the views we have on the Federal Reserve (Fed) but it is just a little disappointing.”
Yields on ten-year Treasury bills started to rise once more to 4.70% compared to 4.55% the day before. Those at two years have once more exceeded 5%.
For the monetary meeting on November 1, the investor consensus leans towards a status quo of the Fed’s key rates for the second time in a row.
The question for the American central bank (Fed) is now no longer how high rates will rise, now at or near their peak, but how long to maintain them at this level, the minutes of the last meeting revealed published Wednesday.
Elsewhere in the world, the bloody attack launched on Saturday by Hamas causing thousands of deaths and nearly 150 hostages and Israel’s reprisals were clouding minds but not really weighing on the market, noted the Cresset analyst. .
On the stock market, the car manufacturer Ford lost 2% to 12 dollars while the United Auto Workers union extended its strike to the unit which manufactures SUVs and pick-up trucks in Kentucky. General Motors also lost 2.13%.
Shares of tobacco manufacturer BAT (British America Tobacco) fell 3.80% following a warning from the American health agency (FDA) banning the sale of menthol electronic cigarettes from its Vuse Alto brand. (RJ Reynolds).
The FDA on Thursday ordered RJ Reynolds Vapor Company (a subsidiary of BAT) not to market six flavors of electronic cigarettes in the United States, including three menthol flavors sold under the Vuse Alto brand.
Pepsico (-2.79%) has largely lost the ground gained at the start of the week following revising its results forecasts for 2023 upwards.
Target supermarkets gained 1.66% following being rated highly by analysts at Bank of America.
Sandals from the German manufacturer Birkenstock, introduced on the New York Stock Exchange on Wednesday without much success (-12%), fell another 6.57% to close at $37.56, almost $10 less than its original price. introduction the day before.
The airline Delta lost 2.39% despite record quarterly sales. For the year as a whole, the group however expects an increase of around 20% in its turnover.
Friday “we will have announcements of banking results and next week those of several consumer companies”, underlined Mr. Ablin. “This should give us a good idea of the health of the consumer, a key factor for the direction of the market,” he added.
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