A New York Stock Exchange operator (AFP/ANGELA WEISS)
The New York Stock Exchange moved resolutely in the red on Friday in response to firm statements by the president of the American central bank (Fed), determined to continue the fight against inflation, at the risk of slowing down the economy.
Around 3:10 p.m. GMT, the Dow Jones lost 1.49%, the Nasdaq index 2.37%, and the broader S&P 500 index, 1.85%.
Jerome Powell has clearly affirmed his determination to continue the tightening cycle to curb the surge in prices, to the point of conducting a monetary policy “sufficiently restrictive to bring inflation down to 2%”, i.e. which voluntarily slows down the economy.
Returning to price stability “will take time” and will lead to “a long period of weaker growth” as well as “a slowdown in the labor market”, hammered the central banker, as part of the Jackson Hole symposium (Wyoming). ).
“He was unequivocal,” reacted Quincy Krosby of LPL Financial, “despite being criticized after the last Fed meeting (in July) for being ambiguous, which had created confusion on the markets,” with some investors imagining that the Federal Reserve was about to ease off.
While before the speech, operators granted a probability equivalent to a hike of half a point and 0.75 percentage point in the Fed’s key rate at its next meeting at the end of September, the cursor has clearly tilted for the second option after Jerome Powell’s speech.
For Chris Zaccarelli, of Advisor Alliance, the President of the Fed “did not say anything new” and was content to “reiterate what he has been saying for several months”.
While the indices fell sharply, in the bond market, the yield on US government bonds at 2 years, which reflects more changes in monetary policy than the 10-year rate, came close to 3.45%, a peak of 15 years reached mid-June.
This heightened expectation of further rate hikes penalized the technology sector, which depends on credit conditions to finance its growth. Alphabet (-4.21%), Amazon (-2.75%) and Meta (-2.95%) lived the sequence badly.
After a fairly marked retreat before the intervention of the President of the Fed, the dollar recovered against the euro, again within a breath of parity, the threshold above which it had gone back.
Jerome Powell’s authoritative message eclipsed the string of strong US indicators that had initially carried the market, in particular the slight decline in US prices in July compared to the previous month, according to the PCE index published on Friday.
The rate of inflation over one year fell to 6.3% against 6.8% in June.
Another encouraging figure, the consumer confidence index, established by the University of Michigan, rose sharply in July, well above expectations. In addition, consumers have revised down their inflation forecasts for the one-year and five-year horizons.
On the side, Electronic Arts was gaining height (+ 5.78% to 134.39 dollars), pushed by information from the Swedish media GLHF, according to which Amazon would be about to make a takeover offer from the publisher of video games.
The ready-to-wear brand Gap was penalized (-1.80 to 9.83 dollars) after declining turnover, a loss in its second quarter (completed at the end of July) and the group’s choice not to no longer make forecasts for its entire financial year, due to too much uncertainty.
Affected, like its German partner BioNTech, by a lawsuit from biotech Moderna (-2.06%) for patent infringement, Pfizer fell 1.15% to 47.35 dollars. The case concerns patents related to so-called messenger RNA technology, which enabled the accelerated development of the first vaccines against Covid-19.
Computer maker Dell Technologies suffered (-10.15% to 43.04 dollars) after the announcement of quarterly sales below expectations, coupled with cautious comments on the second half and a slowdown in demand .
The online installment payment specialist Affirm slipped (-20.40% to 24.86 dollars), the day after the publication, after the stock market, of a greater than expected loss and forecasts deemed disappointing for its current financial year.
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