Technology Sector Triumphs: Mixed Note for NYSE Amid Fed Doubts

2023-06-22 20:58:43

The New York Stock Exchange ended on a mixed note on Thursday, with appetite for the technology sector triumphing over the correction underway since the start of the week, in a market that doubts the offensive rhetoric of the American central bank (Fed).

The Dow Jones fell 0.01%, while the Nasdaq index rose 0.95% and the broader S&P 500 index 0.37%.

The session had started in the red, suggesting a new day of consolidation, the fourth in a row, following several weeks of irresistible ascent.

But the trend has reversed, driven by an improbable combination of stocks in the technology sector and so-called defensive stocks, that is to say stocks that are theoretically less sensitive to the economic situation.

The Nasdaq was particularly supported by Amazon (+4.26%), which announced on Thursday that it was investing $100 million in a customer relations program dedicated to so-called generative artificial intelligence (AI), to help them create and manage AI applications.

In its wake, Apple (+1.65%) set a new record price for its share. The group from Cupertino (California) nevertheless remains below 3,000 billion dollars, a threshold exceeded in January 2022, because since then it has bought back and canceled billions of dollars of shares, which has lowered its market capitalization.

The third tech behemoth, Microsoft, also had the wind in its sails (+1.84%).

The New York market welcomed without emotion the statements of the president of the American central bank (Fed), Jerome Powell, who recalled, before a Senate committee, that a large majority of the members of the Fed were in favor of several increases. rates by the end of the year.

“If the market goes up with these words, it is because he does not believe” in a new series of rate hikes, commented Quincy Krosby, of LPL Financial, “just as he had interpreted his press conference of 14 June”, following the last Fed meeting.

Operators are still counting mainly, as before the Fed meeting, on a last increase in July, before a break until 2024.

“The market thinks that by July 26 (the date of the next meeting), we will have enough economic data to suggest that inflation has slowed faster than expected,” explains the analyst.

On the bond market, rates tightened, but without leaving the range in which they have been evolving for two weeks. The yield on 10-year US government bonds stood at 3.79%, once morest 3.71% on Wednesday at the close.

Wall Street is more carefree than it has been in months, as evidenced by the VIX volatility index, which measures investor nervousness, which fell Thursday to its lowest level since January 2020.

On the stock market, the aeronautical company Spirit Aerosystems, supplier of fuselage and wing elements for the industry, plunged (-9.43%) due to a strike movement at its factory in Wichita (Kansas). ). The news also affected Boeing (-3.05%), of which Spirit Aerosystems is a major subcontractor.

The semiconductor manufacturer Micron surfed (+0.68%) on the announcement of an investment of 825 million dollars in the Indian state of Gujarat, which will go to the construction of an assembly site and testing.

Illustration of a change in the distribution of portfolios, several so-called defensive stocks were sought, in particular PepsiCo (1.04%), Merck (+2.30%) or Johnson & Johnson (+1.06%).

The rebalancing does not benefit banks, which have had a difficult run since the start of the year. Jerome Powell suggested Thursday that local establishments might be exempted from a strengthening of their capital ratios, imposed on major banks.

The big names in the market, Bank of America (-2.14%), JPMorgan Chase (-1.93%) and Morgan Stanley (-2.13%) all fell significantly on Thursday.

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