(New York) The New York Stock Exchange continued to decline at the opening Thursday, after technology stocks dropped the day before, jostled by a more pessimistic Fed on inflation, pushing bond rates up to the highest since the start of the pandemic.
At 10:15 am, the NASDAQ index, with strong technological coloring, dropped 1.21% after falling 3.34% Wednesday to 15,100.17 points.
The Dow Jones fell 0.44% after losing 1.07% to 36,407.11 points.
The extended S&P 500 index lost 0.48% after -1.94% the day before to 4700.58 points.
Rates on 10-year U.S. Treasuries climbed to 1.73%, hitting highs since the start of the pandemic.
“Investors are readjusting their portfolios to a new era of ‘not easy’ money as we emerge from an era of easy money,” summed up Peter Cardillo of Spartan Capital Securities to explain the mood of investors the day before.
The publication of the minutes of the last meeting of the Fed’s monetary policy committee weighed down the market on Wednesday. Its members have said, in unequivocal language, that they now plan to raise the institution’s key rate earlier and more often than expected.
In addition, it is now a question of starting to reduce the Fed’s balance sheet immediately after the first rate hike. This means that the Fed will invest even less in bonds, which could be seen as another monetary tightening of the screw by the markets.
Growth stocks, like that of tech, “are facing the specter of a tougher Fed, driven by a new desire to control inflation,” said Patrick O’Hare of Briefing.com.
Higher rates increase the cost of money for developing companies who have to invest heavily and therefore make them less attractive.
“Yesterday’s strong pullback following the Fed’s report shows that its Central Bank monetary tightening campaign could be more severe than previously thought,” Schwab analysts said.
The big names in tech continued to lose ground like Apple (-0.98% after -2.66% Wednesday) or Microsoft (-1.14% after -3.8%).
Alphabet stabilized (+ 0.13% to 2757 dollars) after being shed 4.68%. Netflix dropped 3.49% to $ 547.
In economic data on Thursday, weekly jobless claims rebounded in the United States during the last week of 2021, while remaining at a very low level as employers face a shortage of workforce.
From December 26 to 1er January, 207,000 people registered as unemployed, 7,000 more than the previous week. It is also more than the 198,000 people expected by analysts.
Witnessing strong demand from the US economy, the US trade deficit widened much more than expected in November on the back of record goods imports, the Commerce Department said.
The deficit of goods and services with the rest of the world amounted to 80.2 billion dollars, an increase of 19.4% compared to the previous month.