The New York Stock Exchange ended in disarray on Tuesday, deprived of a real rebound following statements, considered aggressive, by a Fed official.
The Dow Jones fell 0.26%, the tech-heavy Nasdaq index gained 0.98%, and the broader S&P 500 index gained 0.25%.
After three sessions where investors were hard pressed and suffered considerable losses, the indices looked set to recover when trading began.
“The drop in 10-year rates (yield on US government bonds) was a catalyst for the market, coupled with the fact that the market had experienced a spectacular sweep,” explained Quincy Krosby of LPL Financial.
The Nasdaq, which has been on a rubber band for weeks, thus climbed 2.76% at the start of the session, before considerably reducing its sails, as did, to a lesser extent, the Dow Jones, which ended on a fourth decline in a row, and the S&P 500.
This reversal came as Wall Street faces “a series of headwinds still at work, including concerns regarding the Fed (US central bank), inflation and the possibility of an economic slowdown”, have wrote, in a note, Schwab analysts.
Added to the context were statements by the chairwoman of the Cleveland branch of the Federal Reserve, Loretta Mester, who said she was open to an increase in the key interest rate of 0.75 percentage points at an upcoming meeting of the Fed if the surge in prices did not subside in the United States.
“It helped turn the market around,” said Marc Chandler, head of market strategy for brokerage Bannockburn Global Forex.
Ms. Mester’s remarks also influenced the bond market, which lost the semblance of strength it had regained in the morning. Falling quite significantly, down to 2.93%, the yield on 10-year government bonds then rose to 2.99%. Rates move in the opposite direction to bond prices.
Another reason for the day’s oscillation, the lack of conviction of investors on the eve of the publication of the American inflation indicator CPI, which should provide information on the burning issue of inflation.
“The market hopes to see confirmation that inflation has peaked” and will then slow down, explained Quincy Krosby, while warning “that one or two points on a curve do not change direction” and that t will no doubt have to wait a while longer before being able to confirm this turnaround.
On the side, heckled in recent weeks, the heavyweights of technology, from Nvidia (+ 3.81%) to Intel (+ 2.18%), via Broadcom (+ 3.28%) or AMD (+ 2.74%), tried to stimulate the New York market.
To a lesser extent, Apple (+1.61%), Microsoft (+1.86%) and Alphabet (+1.33%) were also entitled to a respite.
Conversely, banking stocks were shunned, as investors were more attentive to the impact of a possible economic slowdown on the volume and quality of credit than to the restoration of margins with higher rates.
Bank of America (-1.68%), JPMorgan (-2.44%) or Wells Fargo (-2.00%) all fell.
Elsewhere, Peloton suffered (-8.70% to 12.90 dollars), following the publication of a turnover lower than analysts’ forecasts and a greater loss than expected. Even more worrying for investors, the company indicated that it was “weakly” endowed with equity, which raises fears for the sustainability of the specialist in connected exercise bikes and treadmills.
Pfizer advanced (+1.75% to 49.49 dollars) following the announcement of the acquisition, for 11.6 billion dollars, of the laboratory Biohaven Pharmaceutica (+70.78% to 141.99 dollars), specialized especially in the treatment of migraines.
Norwegian Cruise took off (+ 1.63% to 16.21 dollars), driven by results deemed encouraging and the announcement that reservations for the fourth quarter of 2022 are at the level of those of 2019, i.e. before the pandemic. The cruise line can also count, for the first time in more than two years, on an entire fleet.
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