The New York Stock Exchange opened sharply lower on Thursday, recovering from the euphoria that followed Wednesday’s announcement of a marked hike in the Fed’s rate and comments from its chairman.
Around 2:00 p.m. GMT, the Dow Jones dropped 1.44%, the Nasdaq index, with strong technological coloring, 2.60%, and the broader Nasdaq index, 1.76%.
On Wednesday, the market had reacted positively, not so much to the announcement of a half-point increase in the key rate of the American central bank (Fed), already priced in by investors, as to the statements of its president, Jerome Powell.
The manager notably ruled out the prospect of a 0.75 point hike at a future meeting.
In the space of a few hours, operators completely revised their expectations, and on Thursday estimated the probability of a rise of at least 0.75 points at the next meeting in June as nil, when they were evaluating it. at 99% on Wednesday before the Fed’s communication.
“It was a catalyst to hear that a hike of + only + half a point was likely,” said Patrick O’Hare of Briefing.com in a note.
For the analyst, some of the operators also seem to consider, in light of Wednesday’s decisions and comments, that the Fed “can bring inflation under control without dragging the economy into a recession”.
However, after this collective relief, “the market is waking up and realizing that none of the structural problems that have brought it down have been resolved,” said Adam Sarhan of 50 Park Investments.
“Inflation remains high,” he detailed, “the Fed will continue to raise rates and the picture of slow growth has not changed.”
The indices were not helped by two bad indicators, the first reporting a slight increase, higher than expectations, in weekly jobless claims, the other a decline in productivity in the United States in the first quarter .
On the bond market, after having suddenly relaxed in the wake of Jerome Powell’s press conference, rates rose again on Thursday.
The yield on 10-year US government bonds thus crossed the symbolic threshold of 3%, which it had already crossed briefly on Monday, for the first time since the end of 2018.
For Adam Sarhan, investors fear to witness a “recession of the results” of companies listed on Wall Street, a variation of the economic slowdown already at work in the United States.
A feeling fueled by the cautious, even frankly pessimistic forecasts of several companies which published their quarterly results on Wednesday and Thursday, in particular in the e-commerce sector.
The online sales site eBay thus fell (-7.17% to 50.52 dollars) despite sales and earnings above the Wall Street consensus, observers mainly retaining the group’s projections for the second quarter, lower than those of the market.
The e-commerce platform Shopify also collapsed in early trading (-17.61% to $399.99), after the publication of a turnover much lower than expected, as well as a loss significantly higher .
Another e-commerce site, Etsy, dedicated to artisans, was also penalized (-16.24% to 91.57 dollars), despite results in line with expectations, for its forecasts deemed disappointing, which rely on a drop in activity.
Twitter benefited (+3.59% to 50.82 dollars) from the communication of Elon Musk, who managed to raise 7 billion dollars from investors to finance the takeover of the platform.
This sum, collected from funds and wealthy investors such as the entrepreneur Larry Ellison or the Saudi prince Al-Walid ben Talal, will make it possible to reduce the amount borrowed from banks for the operation.
Parent company of the New York Stock Exchange NYSE, Intercontinental Exchange (ICE) suffered sales (-3.02% to 106.54 dollars) after reporting, Wednesday after the stock market, the upcoming acquisition of the specialist in computer services to the sector of real estate, Black Knight, for $13.1 billion.
Snap (-5.92%), Meta (parent company of Instagram, -4.47%) or Alphabet (parent company of YouTube, -3.84%) went into reverse after their fiercest competitor, TikTok, revealed on Wednesday that it would set up an revenue sharing system with the platform’s most popular creators.
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