Wall Street sinks into the red over the week

9 avril 2022

MARKET REVIEW.

The New York Stock Exchange concluded on Friday divided, the Dow Jones barely managing to end on a positive note while the technology sector remained affected by the monetary tightening announced by the Fed.

For its part, the Toronto Stock Exchange closed higher on Friday, as investors were encouraged by strong job market data and wage increases, which increase the likelihood that the Bank of Canada will announce a bigger hike. interest rate next week.

Stock market indices at closing :

1. 1-In Toronto, the S&P / TSX closed up 39.46 points (+0.18%) at 21,874.35 points.
2. 2-In New York, the S&P 500 ended down 11.93 points (-0.27%) at 4,488.28 points.
3. 3-The Nasdaq retreated 186.30 points (-1.34%) to 13,711.00 points.
4. 4-The DOW rose 137.55 points (+0.40%) to 34,721.12 points.
5. 5-The loonie rose US$0.0009 (+0.1169%) to US$0.7954.
6. 6-Oil rose US$1.85 (+1.93%) to US$97.88.
7. 7-Gold was up US$10.50 (+0.54%) at US$1,948.30.
8. 8-Bitcoin fell US$605.94 (-1.39%) to US$42,849.77.

 

"US stocks ended the day mixed, but ended the first week of the new quarter with a weekly drop," Schwab analysts said.

“Unease and apprehension appeared to dominate a relatively quiet session as investors continued to weigh the potential implications of a very aggressive US central bank (Fed) monetary policy tightening cycle,” they added. .

The outlook for severe monetary tightening in the United States, ongoing conflict in Ukraine and COVID-19-related lockdowns in China continued to cloud the economic outlook, Wells Fargo analysts also noted. Adding to inflationary concerns, the Food and Agriculture Organization of the United Nations (FAO) revealed that commodity prices soared almost 13% in March, to an all-time high.

“Overall, this rapid monetary tightening is not expected to tip the US economy into recession,” said Paul Ashworth of Capital Economics.

"But if financial conditions were to tighten more sharply, with a steeper rise in borrowing costs and/or the dollar, then a mild recession would no longer be out of the question," he added.

This pivotal movement by the Fed, confirmed by several statements by members of the Monetary Committee, considerably strained the bond market. Yields on 10-year Treasury bills continued to climb on Friday to reach 2.70% from 2.65% the day before, the highest in more than three years, well before the COVID-19 pandemic. The US dollar (US$) rose to its highest level in a month against the euro, which slid to US$1.0874 per euro (-0.05%) around 8:30 p.m. GMT.

"Wall Street has watched bond yields accelerate," climbing as the value of bonds shrinks, "and investors have swapped their tech stocks for more defensive cards like energy, banks, healthcare or raw materials," explained Edward Moya of Oanda.

On the stock market, Tesla (TSLA) lost 3% to US$1.025 as Elon Musk, who recently acquired just over 9% of Twitter's capital and became its largest shareholder, will soon meet with employees social network for a Q&A session. According to the Washington Post, several Twitter employees expressed their concerns after the arrival of Elon Musk to the board of directors, believing in particular that the values ​​of the billionaire were not in line with the corporate culture of the social network. Twitter (TWTR) fell 3.75% to US$46.23. Amazon (AMZN, US$3089.21) lost 2.11% and Google (Alphabet, GOOGL, US$2665.75) lost 1.80%.

Shares of semiconductor makers, which have risen sharply in recent months amid supply chain issues, were battered after adverse analysts. Nvidia (NVDA, US$231.19) fell 4.50%, AMD (AMD, US$101.00) 2.62% and Micron Technology (MU, US$72.14) 1.42% . Robinhood (HOOD), the popular online brokerage app, plunged 6.88% to US$11.24 after a bearish rating from Goldman Sachs. The company went public less than a year ago in August 2021 at a price of US$38.

Boeing (BA) held back the Dow Jones, the stock losing height (-1.56% to US$175.20) after news that a freighter Boeing 757 broke in half on landing in Costa Rica.