(New York) The New York Stock Exchange ended sharply lower on Friday, driven by profit taking related to the Omicron variant and some nervousness about an upcoming rate hike from the US Central Bank (Fed).
The Dow Jones dropped 0.17% to 34,590.08 points, the NASDAQ dropped 1.92% to 15,085.47 points, and the broader S&P 500 index, 0.84% to 4,538.43 points.
The meeting opened with the report of the US Department of Labor, which announced the creation of 210,000 jobs in the United States in November, while the market expected almost triple (525,000).
Scared by this poor number, the market turned after opening higher.
But it was quickly other factors that took over, to push the indices far into the red, to the point that the NASDAQ came close to -3%.
“It really has little to do with the jobs report, and a lot to do with Omicron,” said Karl Haeling of LBBW bank.
For the analyst, many operators have chosen to sell before the weekend.
If no data concerning the dangerousness of Omicron or the effectiveness of existing vaccines against this new variant is expected over the next two days, “it is likely that we will hear about new cases around the world”, warns -it, which would be likely to affect the morale of the market.
This movement is amplified by the proximity of the end of the year, which encourages investors to sell and take their profits after a year that remains very strong (+ 20.8% since the start of the year for the S&P 500), despite recent upheavals.
In the general opinion, the employment report, even worse than expected, is not likely to change the trajectory of the Fed, which should accelerate the normalization of its monetary policy.
The prospect of a possible rate hike next year puts pressure on high-growth stocks, especially in the tech sector, explained Patrick O’Hare of Briefing.com.
These companies attract investors with their future cash flows, the value of which decreases with rising interest rates.
Among the companies targeted on Friday, the manufacturer of microprocessors AMD (-4.43%), the software publisher Adobe (-8.24%) or Uber (-5.95%). Graphics card specialist Nvidia was also part of the cart (-4.46% to 306.93 dollars), weighed even more by the news, which fell on Thursday, that the American authorities were going to oppose its acquisition of the British giant of microprocessors Arm.
Beyond growth stocks, “the markets are a little worried that the Fed is going too far and tightening too quickly” its monetary policy, according to Karl Haeling.
Also in anticipation of the weekend, investors turned to the bond market, which saw the average rate of US ten-year bonds relax sharply to 1.35% from 1.44% the day before.
On the board, Didi Chuxing, slipped (-22.18% to 6.07 dollars) after the announcement of the next withdrawal from the rating of the “Chinese Uber” on Wall Street, less than six months after its listing on the New York Stock Exchange, under pressure from Chinese authorities.
Technically, after validation by a shareholder vote, the securities listed on Wall Street, ADS (American depository shares), will soon be registered on the Hong Kong Stock Exchange.
In the wake of Didi, another Chinese group, Alibaba continued to sink (-8.23% to 111.96 dollars), at the lowest for four and a half years, weighed down by the rumor of an exit from the rating from the e-commerce giant. Same price for other Chinese e-commerce giants, JD.com (-7.71%) and Pinduoduo (-8.16%), also listed on Wall Street.
Digital transaction specialist DocuSign collapsed 42.22% after reporting lower-than-expected guidance for its fourth quarter (November to January). Chief Executive Officer Dan Springer acknowledged during the earnings conference call that growth was slowing faster than expected after “the COVID-19 boost.”
Gunmaker Smith & Wesson has also been the target of investors (-28.72% to $ 16.33) after posting lower than expected quarterly revenue and profit.