Wall Street alarmed by the Fed’s warlike posture

(New York) The New York Stock Exchange ended lower on Thursday, concerned by the offensive posture of the American central bank (Fed) and its possible consequences on the United States economy.

The Dow Jones fell 1.08%, the NASDAQ index lost 1.82% and the broader S&P 500 index fell 1.64%.

“Investors clearly continue to digest the Fed’s communication, and more particularly the forecasts” of the institution in terms of growth, inflation and monetary trajectory, explained Angelo Kourkafas, of Edward Jones.

A majority of Federal Reserve members are expecting a final tightening this year and are now only counting on two rate cuts in 2024, two fewer than anticipated in June.

This tightening created a shock wave on the bond market, which saw the yield on 2-year US government bonds, the most representative of expectations of the political situation, soar to 5.19%, at its highest. for 17 years.

As for its 10-year equivalent, it went up to 4.49%, a first since November 2007.

“This puts pressure on growth sectors and the NASDAQ, with a strong technological component,” noted Angelo Kourkafas.

With the drop of tech giant capitalizations, in particular Amazon (-4.41%), Nvidia (-2.89%) and Alphabet (-2.40%), hundreds of billions of dollars of valuation have vanished. on Wall Street on Thursday.

But unlike recent weeks, “the decline was more general” during the session, with only 2 of the 30 members of the Dow Jones finishing in the green.

For Patrick O’Hare of Briefing.com, it didn’t take much more to shake up a market “which was already in a consolidation phase.”

Already in a gloomy mood, the New York market has poorly received the drop in new weekly unemployment claims in the United States, to the lowest level in eight months.

“Even if the labor market is calming down, we are still seeing very few layoffs,” commented Nancy Vanden Houten of Oxford Economics, which is likely to encourage the Fed to be more firm.

“They could bring down the economy and push us into a recession,” argued Phil Flynn of Price Futures Group.

Added to this, according to Patrick O’Hare, is the budgetary impasse in Congress, which threatens to paralyze the functioning of the federal state if a political agreement is not found within ten days, some of the Republican elected officials demanding drastic cuts.

On the stock market, the courier group FedEx was one of the few to progress (+4.52%), supported by a quarterly net profit significantly higher than expectations, thanks in particular to the effects of a vast cost reduction plan. , even if its turnover was slightly disappointing.

The Memphis company raised its profit forecast range for its full 2024 fiscal year (June to May).

Another miracle of the session, Disney (+0.21%), which took advantage of information from the CNBC channel, according to which, in Hollywood, screenwriters and studios would be close to an agreement which would put an end to the strike started here almost five months.

The specialist in business communication networks Cisco (-3.89%) paid for the announcement of the acquisition of the data analysis software publisher Splunk (+20.77%) for 28 billion dollars.

Fox Corp gained 2.99%, with investors reacting favorably to the announcement of the withdrawal of Rupert Murdoch, who will hand over the reins of his empire to his eldest son, Lachlan.

Fifth negative session in a row for the microprocessor designer Arm (-1.42%), after a first day of trading with fanfare for an introduction to Wall Street. The British group lost some $12 billion in market valuation.