(New York) Stocks fluctuated on Wall Street on Tuesday to end in the red, after new interpretations on the direction of the monetary policy of the Fed and in the face of geopolitical tensions.
Updated yesterday at 5:40 p.m.
According to final results at the close, the Dow Jones index fell 1.23% to 32,396.17 points, the NASDAQ fell 0.16% to 12,348.76 points and the S&P 500 0. .67% to 4091.19 points.
“Geopolitical concerns heightened […] in connection with Nancy Pelosi’s visit to Taiwan, upset the markets a bit,” said Peter Cardillo of Spartan Capital.
The visit of the Speaker of the American House of Representatives Nancy Pelosi to Taiwan, which Beijing considers as one of the provinces, captured the attention of investors, worrying about the risks of escalation with China.
Upon the arrival of the Speaker of the United States House of Representatives, the Chinese Ministry of Foreign Affairs denounced “a serious violation” of American commitments vis-à-vis China, which “seriously undermines peace and regional stability.
Mme Pelosi – the highest American official to visit the island in 25 years – for her part recalled in a press release this “unconditional support of America for the vibrant democracy of Taiwan”, considering that her presence did not contravene in “no way” to long-standing US policy toward China.
Beyond geopolitical concerns, new comments from members of the US Federal Reserve (Fed) have changed the interpretations that investors had made of its chairman Jerome Powell’s press conference last week.
While Wall Street had celebrated the idea that the Fed could soon weaken its monetary tightening, several members of the Monetary Committee argued on Tuesday that we were “far from it”.
The Toronto Stock Exchange also closed lower on Tuesday as it resumed trading after a long weekend.
The Toronto floor’s S&P/TSX Composite Index fell 187.59 points to end the session with 19,505.33 points.
For much of Tuesday, there was no obvious trend in North American market movements, said Michael Currie, vice president and investment manager of TD Wealth Management.
According to Mr. Currie, this type of divergence is often seen when investors are unsure what to think about the development of the news.
“At this point, however, investors are speculating more than reacting to tangible implications,” Currie noted.
“(The visit of Mr.me Pelosi is) definitely a big story, and it has market impacts, but whether it will be a big event or a non-event is debatable,” he added.
In Canada, only the Information Technology and Health Care sectors ended the day in positive territory, while the Materials sector was the biggest loser, followed by Energy.
In the currency market, the Canadian dollar traded at an average rate of 77.78 cents US, down from 77.98 cents US on Friday.
Bond rates are rising
Thus the president of the antenna of the Fed of San Francisco Mary Daly, in an interview with CNBC, affirmed that the Central Bank “was far from having finished” with the fight against inflation.
Similarly, his Chicago Fed colleague Charles Evans hinted that another sharp 75 basis point rate hike may still be on the table for the September meeting.
10-year bond yields immediately rebounded, climbing to 2.75% from 2.57% the previous day.
“The market was shaken by these comments from the Fed which are tougher than expected,” acknowledged Art Hogan of B. Riley Wealth.
The eleven S&P sectors ended down, starting with the real estate sector (-1.30%) and the banks (-1.07%) which are very sensitive to rate hikes.
In the rank of business results, Uber was celebrated by investors (+ 18.90% to 29.25 dollars), because even if the driverless car rental company suffered a heavy loss, its quarterly turnover s has soared, both in its transport activity, but also in meal delivery.
Its turnover from April to June rose to 8.07 billion dollars against 7.36 billion expected.
The performance of the Caterpillar construction machinery group, on the other hand, weighed on the Dow Jones as the group’s sales disappointed at 14.2 billion dollars instead of the 14.35 billion forecast by analysts.
Caterpillar, whose stock fell 5.82%, is considered a barometer of the health of the global economy since its machinery, equipment, equipment and services are used in many business sectors depending on the economic situation.
The group said it was suffering from supply chain issues and the impact of exchange rates.
On the NASDAQ, Pinterest pulled out of the game (+11.61% to 22.31 dollars) after slightly better than expected results and a stable number of users (433 million) despite the difficulties of advertisers.
The rise of an activist shareholder, Elliott Investment Management, which supports the management of the social network also gave investors confidence.
The airline JetBlue (-6.40%) took a nose dive after announcing a much stronger than expected loss caused in particular by rising kerosene costs, as the company prepares to complete the takeover of Spirit after a bitter battle with its competitor Frontier.
Airbnb, which ended up 4.62%, lost 6.74% in post-closing electronic trading as its second quarter results showed fewer bookings than expected by the market.
Starbucks, whose title closed lower (-1.41%), regained the momentum lost after the close (+1.54%) as the chain managed to increase its sales thanks to price increases even if the frequentation of its coffees has been reduced.
With The Canadian Press