Wall Street ends down, nervous in the face of rising rates

(New York) The New York Stock Exchange ended down on Tuesday, caught in headwinds, from the rise in bond rates to that of oil prices, but without panicking.

The Dow Jones fell 1.00%, the NASDAQ index fell 0.95% and the broader S&P 500 index lost 0.72%.

“Higher bond yields are an excuse to take some money off the table and make some profits,” explained Patrick O’Hare of Briefing.com

The yield on 10-year US government bonds rose to 4.40%, for the first time in more than four months.

This tension follows the publication on Monday of a price indicator which showed a jump in March in the manufacturing industry in the United States.

For Patrick O’Hare, the New York market also noted the bout of oil fever, at its highest in five months, against a backdrop of deterioration in the geopolitical situation in the Middle East.

Beyond inflation, Wall Street saw in the JOLTS employment report on Tuesday a new sign of an economy that refuses to give in.

The document showed that in February the rate of layoffs remained below its pre-coronavirus pandemic level.

This report “is likely to allay any fears among members of the Federal Reserve (the American central bank) regarding the risks for the economy of a patient approach to rate cuts,” commented Nancy in a note. Vanden Houten of Oxford Economics.

The market was also treated to some bad news on the microeconomic side, notably forecasts far below expectations from the holding company PVH Corp (-22.22%), which controls the Calvin Klein and Tommy Hilfiger brands.

“It is in line with other alerts that we have received from other distribution brands,” argued Patrick O’Hare, including sports equipment manufacturers Nike and Lululemon.

“This raises a little apprehension about a decline in discretionary spending” (non-essential), said the analyst.

Another downside is the collapse of health insurers, notably UnitedHealth Group (-6.44%), the largest weighting of the Dow Jones which weighs more than 8% of the index, as well as Humana (-13.41%) or CVS Heatlth (-7.21%).

They were reacting to communication from the American government, which set the prices of its Medicare Advantage health coverage program at a lower level than expected, which is eating into the industry’s margins.

Government contracted health insurers cover about 30 million people who sign up for Medicare Advantage.

However, despite this unfavorable configuration, the indices recovered at the end of the session and limited their losses.

“There is no feeling of panic at all,” according to Patrick O’Hare. “It’s an orderly consolidation. »

On the stock market, Tesla made a head-to-tail (-4.97%), after the publication of sales figures significantly below expectations for the first quarter, a disappointment attributed to disruptions in maritime traffic in the Red Sea and to an arson attack at the factory near Berlin, Germany, in early March.

The UPS courier group (+1.04%) benefited from the signing of a new subcontracting contract with the United States Postal Services (USPS), which preferred the Atlanta (Georgia) group to its competitor FedEx (-1.73%).

GE Vernova (+3.85%), which brings together the activities of the former conglomerate GE in renewable energies, made a notable debut in New York for its first day of trading.

GE’s healthcare subsidiary, GE HealthCare, had already been listed on the stock market in January 2023.

The former giant of American capitalism has thus completed its split into three distinct entities. The third company, GE Aerospace, inherits the listed vehicle GE (-2.42%) which previously brought together all the group’s activities.

Toronto Stock Exchange

Canada’s main stock index lost more than 100 points on Tuesday, as losses in financial, industrial and telecommunications stocks offset strength in energy and base metals stocks, while U.S. stock markets also fell.

The S&P/TSX Composite Index closed down 110.15 points at 22,075.10.

In New York, the Dow Jones industrial average fell 396.61 points to 39,170.24. The S&P 500 index fell 37.96 points to 5,205.81, while the NASDAQ Composite Index fell 156.38 points to 16,240.45.

The Canadian dollar traded at 73.68 US cents, compared to 73.67 US cents on Monday.

The crude oil contract for May rose US$1.44 to US$85.15 per barrel and the natural gas contract for May rose three cents to US$1.86 per million BTU.

The June gold contract was up US$24.70 at US$2,281.80 an ounce and the May copper contract was up 2 cents at US$4.07 a pound.

The Canadian Press

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