Around 4:15 p.m., the Dow Jones index, which opened in the green, dropped 0.39%. The Nasdaq stagnated (-0.08%), as did the S&P 500 (-0.10%).
The New York Stock Exchange oscillated, undecided, Tuesday morning as an important meeting of the Federal Reserve (Fed) began, which is preparing to significantly raise interest rates on Wednesday.
Around 2:15 p.m. GMT, the Dow Jones index, which opened in the green, dropped 0.39%. The Nasdaq stagnated (-0.08%), as did the S&P 500 (-0.10%).
Monday, Wall Street had recorded a fragile rebound following a month of April in free fall. The Dow Jones had nibbled 0.26% to 33,061.50 points. The Nasdaq, with strong technological coloring, had gained 1.63% to 12,536.02 points. The S&P 500 had taken 0.57% to 4,155.38 points.
“Investors appear cautious ahead of the Fed’s monetary policy decision on Wednesday,” Schwab analysts noted. “But markets remain nervous as the Fed should be aggressive in this cycle of monetary tightening,” they added.
The US Central Bank began its meeting Tuesday at 10:00 a.m. local time (2:00 p.m. GMT) and will make its decision Wednesday at 6:00 p.m. GMT. Its president Jerome Powell will hold a press conference in stride.
“A rise of 50 basis points (0.50%) is 99% certainty, according to futures contracts on the federal funds markets,” assured Art Hogan of National Securities.
Overnight rates therefore have every chance of climbing to a level between 0.75% and 1%, the first turn of the screw of this magnitude in more than 20 years. The Fed thus intends to curb inflation at its highest level in forty years.
“But what we want to know is whether further increases of 50 basis points or even 75 basis points are likely and what the plan is to shrink the central bank’s huge balance sheet,” the analyst added.
On Tuesday, the bond market caught its breath following the tension on rates the day before.
Fearing inflation and a rise in the cost of money, investors sold Treasuries and their yields soared on Monday.
The rate on 10-year bonds thus crossed the 3% threshold for the first time since 2018 at mid-session in New York. On Tuesday, it fell back to 2.92%.
The market remains concerned “regarding the headwinds that inflation is, how aggressive the Fed will be in mitigating it and the lockdowns due to China’s zero Covid policy and the supply chain issues this brings,” once more underlined Art Hogan.
At the same time, the results season continues to be in full swing. So far, 80% of S&P 500 companies that have announced their results have presented better than expected accounts, noted the National Securities analyst.
The American pharmaceutical company Pfizer has thus announced a turnover of 25.7 billion dollars in the first quarter, up 77% over one year, largely thanks to sales of its vaccine once morest Covid-19.
But its annual profit forecasts have been revised downwards and the title yielded 0.62%, to 48.04 dollars.
The travel site Expedia, listed on the Nasdaq, plunged 12%, to 153 dollars, following having already lost more than 8% the day before following poor results. Expedia took a loss of $122 million or 48 cents per share when analysts expected a loss of 27 cents per share.
Its turnover in the 1st quarter, even if it doubled to 2.25 billion dollars compared to the same period of 2021, was also below expectations.
The titles of the Avis-Budget car rental company rose (+1.58% to 285 dollars, following +1.2% the day before). The group disclosed a turnover up 77% and a profit of 529 million dollars, once morest a loss at the same time the year before.
Amazon was up (+1.20% to 2,520 dollars) following the failure of the Amazon Labor Union (ALU) to set up in a sorting center of the online distribution giant in New York.
