(New York) The New York Stock Exchange was down sharply on Tuesday following a long weekend, after rising bond yields and disappointing bank results.
Posted at 9:41 a.m.
Updated at 10:22 a.m.
Technology was leading the decline, with the NASDAQ plunging 1.74%. The Dow Jones index dropped 1.155% and the S&P 500 lost 1.53%.
Rates on 10-year US Treasury bonds climbed to their highest in 2 years at 1.82% against 1.78% the day before.
Wall Street remained closed on Monday due to a public holiday.
On Friday, Wall Street’s flagship index lost 0.56% to 35,911.81 points, while the NASDAQ gained 0.59% to 14,893.75 points and the S&P 500 gained 0.08. %, at 4662.85 points. The three indices had ended slightly down over the week.
In the wake of the bond tension, the dollar gained strength against the euro at 1.1364 dollar for one euro (+0.39%) while oil prices continued to soar, rising to a peak since seven years.
“The tech sector, which contains many companies valued primarily on the promise of their future earnings, is under pressure due to soaring Treasury yields,” explained Art Hogan of National Securities.
“The higher the yields, the more the future income of these groups loses value”, adds the analyst.
Investors were once again gripped by fears of a Fed interest rate hike ‘as there is fresh market commentary suggesting the possibility of a 50 basis point hike as early as March’ , reported Patrick O’Hare of Briefing.com.
So far the markets have priced in three 25 basis point hikes in 2022.
Yields on shorter two-year bills accelerated their rise to over 1% for the first time since February 2020.
In terms of economic data, New York-area manufacturing activity contracted in January for the first time since June 2020, according to the Fed’s Empire State monthly indicator.
“Business activity has stabilized abruptly in New York State, according to companies responding to the survey,” the Fed said in its statement.
Featured in the rating, the American video game giant Activision-Blizzard was bought by Microsoft for the record sum of 69 billion dollars, announced the computer group.
The title of the publisher of “Call of Duty”, “World of Warcraft” and “Candy Crush”, took more than 30% to 85.25 dollars.
If the transaction is confirmed, it will be the largest acquisition in the video game sector, far ahead of the takeover of Zynga by Take-Two for $12.7 billion announced last week.
For Microsoft too, this is the largest takeover in its history. The title slipped 1.54% to 305 dollars.
All the big tech names were down, from Facebook (Meta, -3.94%) to Google (-2.74%) to Amazon (-2.56%).
While corporate results will focus investors’ attention from this week, Goldman Sachs, a member of the Dow Jones, disappointed and was heavily punished. The action fell -8.76% to 347 dollars, falling to its lowest in a year.
Even though the American investment bank experienced record turnover and profits in 2021, its results did not live up to expectations in the 4and trimester.
Morgan Stanley, whose results are expected on Wednesday, also plunged 4.25% to 94.68 dollars.
The New York-listed securities of the Chinese online distribution giant Alibaba lost more than 3%, press reports suggesting a possible review by the Biden administration of the security conditions of the Chinese group’s “cloud” activity.
All S&P sectors were in the red except energy.