(New York) Wall Street accelerated its losses on Friday, concluding another week of decline, despite a good US employment report, which did not reassure either inflation or the tightening of monetary policy.
Updated yesterday at 4:33 p.m.
The Dow Jones index lost 1.05% to 32,899.70 points, according to final results. The tech-heavy NASDAQ plunged 2.47% to 12,012.73 points. The S&P 500 concluded down 1.63% to 4108.54 points.
Over the week, the Dow Jones and the S&P 500 are down around 1% and the NASDAQ by 1.25%.
“Investors weighed the monetary policy implications of the jobs report,” Wells Fargo analysts said.
The labor market for the month of May turned out to be more buoyant than expected, which will not encourage the US central bank to pause its rate hikes as the Fed seeks to slow the economy to counter the inflation.
With 390,000 new hires in May, more than expected, and an unemployment rate that remained at 3.6%, close to its lowest level in fifty years, the American economy remains solid.
This is what worried the market on Friday, among others.
“This report is too good to convince the market that the Fed will pause rate hikes after its planned 50 basis point hikes in June and July,” said Patrick O’Hare of Briefing.com.
Investors reacted by getting out of bonds, which pushed up yields on Treasury bills to almost 3% in the morning before stabilizing at 2.95% against 2.90% the day before.
In less than two weeks, the US Federal Reserve is expected to raise interest rates again by half a percentage point, and probably in July as well, according to officials’ indications. But markets are wondering what the central bank will do in September.
“I think the most likely path for the market is still down,” conceded skeptically Maris Ogg, portfolio manager for Tower Bridge Advisors.
“The key statistic for the rest of the year is inflation. If we see inflation subside, that is to say settling around 5% before the end of the year, we will have the possibility of reaching a floor,” added the specialist.
“But if inflation does not improve, it will be difficult to get out of this downward trend,” she warned. The year-on-year price increase in the United States rose to 8.3% in April, after 8.5% in March, still close to the highest level for 40 years.
“It would surprise me if we had the worst for the equity market,” said Ms.me Ogg.
On the front of technology stocks, the mood of investors was showered from the opening by press reports according to which the boss of Tesla Elon Musk evoked a reduction of 10% of the workforce of his group.
In an email to executives, the billionaire said he had “a super bad feeling about the economy”, asked to “suspend all hiring worldwide” and mentioned a 10% reduction in staff at the company which employs a just over 100,000 people.
The title of the electric car manufacturer fell 9.22% to 703.55 dollars, leading to a decline in the big names in tech. Apple and Facebook (Meta) lost around 4%.
In the electric vehicle sector, Rivian dropped 5.48% and Lucid 6.46%.
“The gloomy prospects presented by Elon Musk […] follow comments from other business leaders who also gave a pessimistic assessment of the economy, such as JPMorgan CEO Jamie Dimon,” Wells Fargo analysts said.
Elsewhere on the exchange, the largest cryptocurrency exchange in the United States, Coinbase, plunged 9.66% to $66.69 having, as Tesla intends, imposed a hiring freeze.
The title of the anti-COVID-19 vaccine maker Novavax, which uses a more traditional technique than those of Pfizer or Moderna, fell 20.03% to 44.76 dollars as the American health authority of the FDA raised doubts about side effects that affect the heart.
With the rise in crude oil and fuel prices continuing, airline stocks fell like American Airlines (-7.10% to 16.22 dollars) or Delta Air Lines (-3.65% to 38.54 dollars).