The facade of the New York Stock Exchange (AFP/ANGELA WEISS)
The New York Stock Exchange concluded in sharp decline Thursday weighed down by the monetary tightening decisions of the ECB but also by the fear of the announcement Friday of an American inflation remained tenacious in May.
The Dow Jones index, which posted its worst session since mid-May, ended down 1.94% at 32,272.79 points. The tech-heavy Nasdaq plunged 2.75% to 11,754.23 points and the S&P 500 2.38% to 4,017.82 points, according to interim results at the close.
Yields on 10-year Treasury bills, which move inversely to their price, remained tight, above 3.04%.
“Primarily, we’re seeing a prelude to inflation data for Friday which is really making the market nervous,” said Peter Cardillo of Spartan Capital Securities.
Analysts expect a still strong CPI consumer price index for last month in the United States with an increase of 0.7% over the month (after +0.3% in March) and 8.3 % over twelve months.
“This report could have implications for the decision of the US Federal Reserve next week,” Wells Fargo analysts worried as the Fed holds its monetary meeting next Tuesday and Wednesday and is expected to raise key rates again by 50. basis points, according to market expectations.
“The other nervous factor comes from the European Central Bank (ECB), which plans to raise rates by a quarter point in July, stop its asset purchases and probably operate another 50 basis point hike in September. “, underlined Mr. Cardillo.
In addition, the ECB’s new economic forecasts show that inflation will climb to 6.8% this year while eurozone GDP is likely to grow by only 2.8% in 2022, a profile of curves that resembles to stagflation.
“In summary, the market is focused on the central banks’ fight against inflation,” concluded the Spartan Capital analyst. A concern that Schwab experts echoed: “the persistent rise in prices and the decision of central banks worldwide to tighten their monetary policy are fueling fears of recession”.
The Wall Street indices, which had started slightly in the red, gradually faltered during the session before accelerating their fall at the close, these movements being amplified by the low trading volume.
All S&P sectors plunged into the red, from communications services (-2.75%) to consumer products (-1.50%) to real estate (-2.29%) and banks ( -2.61%).
On the side, the big names in tech, so-called growth stocks sensitive to rising rates, have fallen sharply like Apple (-3.60%), Amazon (-4.15%) or Netflix (-4, 96%).
Manufacturers of microprocessors, which had experienced a rising session the day before, have largely lost ground like AMD (-3%) or Nvidia (-3.22%).
The Target department store chain, which sounded the alarm this week on consumer demand, fell further (-1.37%) despite the announcement of an increase in its dividend.
Five Below, a chain of discount items, also lost 1.37% following a drastic reduction in its sales and earnings forecast for the full year.
The title of Novavax laboratories, whose American health authorities nevertheless recommended at the beginning of the week a green light for the vaccine against the coronavirus, melted by 17.22% to 41.48 dollars. Health authority FDA said Thursday that the decision was delayed to inspect changes in the manufacturing process.
Tesla was down 0.89% at the end of the session at $719.12, after being up almost 4% during the day.
Skillsoft, a company that does digital training, collapsed 19.24% as its declining quarterly sales disappointed Wall Street.