(New York) The New York Stock Exchange ended lower on Wednesday, scalded by the rise in bond rates and the slow progression of discussions on the American debt, in a context of general caution.
The Dow Jones fell 0.77%, the NASDAQ index fell 0.61% and the broader S&P 500 index lost 0.73%.
Eight days before a possible default by the United States, negotiations between the White House and the Republican opposition continue to reach an increase in the debt ceiling, but without significant progress on Wednesday.
US President Joe Biden has said he is ready for a framework for public spending, which would reduce it by a trillion dollars over ten years compared to the trajectory initially planned.
His main interlocutor, Republican Speaker of the House of Representatives Kevin McCarthy, said he was optimistic about the outcome of the talks, but showed no sign of inflection.
“We all know what will happen,” commented Maris Ogg of Tower Bridge Advisors, for whom the United States will avoid default. “The only question is whether there is an agreement or whether they postpone the deadline” by adopting a text that leaves more time for discussions.
Even if the worst is avoided, “you will have a lot of debt issues” in the weeks and months to come, to catch up with those that have not been able to take place in recent months, she argues.
This influx of Treasuries is expected to unbalance supply versus demand, drive down the price of US government bonds and force the government to offer higher rates.
It is this anticipation that partly justifies the tensions experienced by the bond market. On Wednesday, the yield on 10-year US government bonds stood at 3.74%, against 3.69% the day before closing.
The other element of explanation is due to the minutes of the last meeting of the American central bank (Fed), published on Wednesday, which confirms that its members are in favor of keeping rates high in the medium term.
“Wall Street took two punches” that kept it in the red, where it had been since opening, Edward Moya of Oanda concluded in a note.
This environment of high interest rates is, in fact, negative for the equity market, which until recently was hoping for a monetary turnaround and several falls by the end of the year.
A series of well-made publications in the distribution sector did not improve the mood of investors.
Department store chain Kohl’s (+7.52%) was sought after posting better-than-expected results.
The group improved its margins, as did the clothing chain Abercrombie & Fitch (which also owns the Holister brand), whose results also came out above analysts’ expectations. The title took off by 31.07%.
Elsewhere in the distribution sector, supermarket chain Target dropped 2.76%. The group announced Wednesday the withdrawal of its shelves of products celebrating the LGBT + community, a decision justified by threats made against some of its employees, underlining the climate of tension which reigns on the subject in the United States.
Regional bank PacWest, often targeted since the start of the banking crisis, fell 2.42% after several sessions in levitation. The establishment announced on Tuesday evening the sale of its subsidiary Civic Financial Services, dedicated to loans to real estate professionals, to Roc Capital Holdings.
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