The New York Stock Exchange opened lower on Wednesday, depressed by the prospect of a deep recession in 2023, combined with continued monetary tightening by the US central bank (Fed).
Around 3:00 p.m. GMT, the Dow Jones lost 0.15%, the Nasdaq index fell by 0.68% and the broader S&P 500 index yielded 0.27%.
The S&P 500 remains on four consecutive negative sessions and seven declines in eight trading days.
“It looks like investors are starting to price in the possibility of a recession next year,” said Jack Ablin of Cresset Capital.
The Business Roundtable’s quarterly survey of top executives, released on Monday, showed top executives view the current climate as less favorable to hiring, investing and doing business.
Briefing.com’s Patrick O’Hare says Wall Street moved too quickly a week ago when Fed Chairman Jerome Powell spoke regarding a possible deceleration in tightening current currency.
The significant gains recorded that day were gradually eroded, to the point of returning to square one.
“Traders are selling because they are worried that the Fed’s key rate will go higher than expected in 2023 and that the economy will take a bigger hit,” O’Hare said.
Bond yields reflected these expectations of an anemic economy in the medium term. The yield on 10-year US government bonds eased to 3.46%, once morest 3.53% the day before.
However, on the equity market, “we do not yet see many downward revisions to earnings estimates for 2023”, noted Jack Ablin.
In addition, observes the manager, the rates of corporate bonds do not deviate, for the moment, from those of government bonds. In times of uncertainty or even recession, the risk associated with corporate credit by investors generally increases and their rates rise.
These two elements lead Jack Ablin to conclude that “investors are not yet convinced as to the severity of the recession”.
But for Patrick O’Hare, the market is worried that earnings estimates for 2023 “are too high and stocks are overvalued”.
Among the few rare indicators of the day, the cost of labor rose by 2.4% in the third quarter in the United States, significantly less than the 3.5% expected by economists, an encouraging sign regarding a possible slowdown in the economy. inflation.
On the side, the agri-food group Campbell Soup (+ 3.39% to 54.78 dollars), manufacturer of the famous canned soups, soared following the publication of a turnover and a profit well above expectations, through price increases.
The online car sales platform Carvana was in dire straits (-39.49% to 4.06 dollars), following the publication of a note from Wedbush Securities, which mentioned a possible bankruptcy filing and lowered its price target just one dollar per share.
Tesla continued its decline (-3.19% to 174.04 dollars), affected by the economic context and the slowdown in Chinese demand.
Apple also remained on the downward slope (-1.26% to 141.12 dollars). The president of the Japanese electronic components group Murata Manufacturing told the Bloomberg agency that he expected a drop in production of the iPhone 14 due to a slowdown in demand.
Nasdaq
