(New York) The New York Stock Exchange concluded clearly in the red on Wednesday, weighed down by technology which received a mixed reception with the results of Alphabet and Microsoft, but also by the Fed which dampened hopes of a decline rates from March.
The Dow Jones index lost 0.82% to 38,150.30 points, the NASDAQ plunged 2.23% to 15,164.01 points and the S&P 500 fell 1.61% to 4845.65 points.
The New York market nevertheless ended the month of January with a monthly gain, the third in a row.
Two of the “Magnificent Seven”, these technology mega-capitalizations, namely Microsoft (-2.69%) and Alphabet (-7.35%), were under strong pressure, following profit-taking. The two groups had announced results the day before at the close of the markets, although they were largely in line with forecasts.
“The losses in these stocks are not because the results or forecasts are bad,” explained Patrick O’Hare of Briefing.com. “This is because expectations were extremely high and these stocks were showing huge gains before their releases,” he added.
For Alphabet, investors focused on Google’s advertising revenues which came out weaker than expected. The group nevertheless generated a quarterly profit of $20.7 billion, higher than expectations.
The stock of chip manufacturer AMD also lost 2.54%, on this profit-taking movement, despite better than expected turnover and profits in line with forecasts.
These sales of heavyweight NASDAQ stocks dragged the rest of the “Magnificent Seven” down, notably Apple (1.94%), Amazon (-2.39%) and Meta (-2.48%), whose results are expected on Thursday.
But the event of the day was the outcome of the Fed’s monetary meeting where, as expected, the American central bank left its rates unchanged at their highest in 22 years between 5.25% and 5.50%.
The Monetary Committee has warned the market that it is seeking “greater confidence” in a sustained fall in inflation before considering rate cuts. The Fed estimates that price increases are still “high” and that “the economic outlook is uncertain”.
If Jerome Powell, the head of the Fed, admitted during his press conference that the cycle of rate increases had “probably reached its peak” and clearly ruled out the probability of a rate cut as early as March , as the stockholders still hoped.
“Mr. Powell virtually said there would be no change in rates in March. This has been a disappointment for the market,” commented Peter Cardillo of Spartan Capital.
The Fed president nevertheless stressed that “almost all” members of the monetary policy committee were in favor “of a rate cut this year”, specifying however that “the timing chosen for this will be linked to our confidence in the fact that inflation is on a sustainable trajectory towards 2%.”
“The market had already opened lower after the results from Microsoft and Google. The Fed added pressure on stocks,” Mr. Cardillo underlined.
Ten-year bond rates stood at 3.96% compared to 4.03 the day before around 4 p.m. (Eastern time). Those at two years in particular relaxed to 4.24% instead of 4.33% on Tuesday.
Elsewhere, Boeing rose 5.28%. The aircraft manufacturer announced a loss of $23 million in the fourth quarter, much less than analysts feared, on revenue of $22.02 billion.
After the torn door incident on an Alaska Airlines Boeing 737 MAX 9, which resulted in the grounding of numerous aircraft, the aircraft manufacturer decided not to make forecasts for the 2024 financial year.
The Paramount media group (CBS, MTV, Paramount studio) soared 5.28% after American tycoon Byron Allen made a $14.3 billion buyout offer.
Perceived as the smallest of the great actors of television and streamingParamount Global has been the object of desire for many months.
The TSX falling
Canada’s main stock index lost more than 200 points on Wednesday amid broad weakness, while U.S. markets also fell, led by losses in the technology sector.
Markets were mixed for most of the day, led by weakness in the technology sector. However, after the US Federal Reserve’s interest rate decision, they fell for the rest of the afternoon, with the NASDAQ ending the day down 2.2% and the S&P 500 down 2.2%. 1.6%.
The S&P/TSX Composite Index lost 205.99 points to 21,021.88.
The main factor in the decline of the markets on Wednesday was the weakness of large technology companies after the publication of the financial results of some of them, mentioned Jules Boudreau, senior economist at Mackenzie Investments.
According to Mr. Boudreau, the announcement on interest rates in the United States also weighed on stocks.
While the central bank’s holding of rates is not a surprise, the statement it made was more hawkish than expected, he said.
The Fed has made it clear that it needs greater confidence about inflation’s path toward 2% before it can cut rates.
“We’re not declaring victory at all,” Chairman Jerome Powell said, adding that the central bank was unlikely to gain enough confidence to cut rates by March.
Investors anticipated the start of a rate reduction in March, but with the Fed’s remarks on Wednesday, a reduction in March is ruled out, according to Mr. Boudreau, adding that “it was still a little early in our opinion “.
On the currency market, the Canadian dollar was trading at 74.64 US cents, compared to 74.53 US cents on Tuesday.
Oil prices were down US$1.97 at US$75.85 per barrel and the natural gas contract was up 2 cents at US$2.10 per million BTUs.
Gold prices jumped US$16.50 to US$2,067.40 an ounce and copper prices rose half a cent to US$3.91 a pound.
The Canadian Press and the Associated Press