(New York) The New York Stock Exchange ended Friday its worst week of the year at half mast, depressed by an unexpected rebound in US inflation.
The Dow Jones index lost 1.02% to 332,816.92 points, the tech-heavy NASDAQ 1.69% to 11,394.94 points and the S&P 500 index 1.05% to 3,970.04 points. .
More details to come.
Inflation in the United States, measured by the PCE index, the most followed by the American central bank (Fed), stood at 5.4% over one year in January against 5.3% the month before.
Over one month, it accelerated to 0.6% against 0.2% in December, while analysts were expecting +0.4%. Even without food and energy, core inflation is also on an upward trend (+0.6%).
This caused bond yields to rise at the expense of equities.
Thus the rates on two-year Treasury bills jumped to 4.80%, against 4.69% the day before, reaching their highest since 2007. The 10-year rates climbed to 3.94% against 3.87% THURSDAY.
The dollar, benefiting from the prospect of higher rates for longer, inflated more than half a percentage point against major currencies shortly before 5 p.m. EST.
Against the euro, it fell back below 1.06 dollars for one euro, to a level not seen for seven weeks.
As for Wall Street, it had its worst week since the beginning of the year, with a weekly loss of almost 2.99% for the Dow Jones, 3.33% for the NASDAQ and 2.70% for the S&P 500 Broad Index.
“Investors sold equities after this scorching inflation which encourages betting that the Fed will raise rates during its next three monetary meetings”, underlined Edward Moya of Oanda.
Until now, underlined Tom Cahill of Ventura Wealth Management “the markets were betting rather on one or two additional increases”.
“Hard to say that this inflation figure is not worrying,” added the analyst.
He mentioned that future Fed hikes could take the level of overnight rates to 5.50% “which is starting to have the potential to push the economy into recession.”
Other factors weighed on Wall Street, including geopolitical tensions with the war in Ukraine entering its second year and the planned dispatch to Taiwan – reported in the press – of new American troops to help with military training.
The decline in prices affected all sectors of the S&P except materials (+0.65%) and banking shares which hoisted their heads above water (+0.10%) while with the rise in interest rates , banks can recoup profits by investing in bonds, noted Tom Cahill.
Thus JP Morgan and Wells Fargo took almost 1%.
But real estate (-1.82%), which is suffering with the increased cost of mortgages, and technology (-1.77%), very sensitive to the cost of credit for its investments, led the decline.
Boeing, one of the heavyweights of the Dow Jones, fell 4.80%. The aircraft manufacturer has again suspended the delivery of its long-haul 787 aircraft, already interrupted for several months in 2021 and 2022 for poor workmanship, in order to analyze a fuselage element more closely.
Warner Bros. Discovery dropped 1.14% after disappointing quarterly sales and an advertising market described as “difficult”. Paramount sold 4.86%, the chain of streaming Roku fell 6.20% and Netflix lost 2.01%.
Beyond Meat (+10.15%) was sought after as the meat-substitute steak specialist reported a lower-than-expected quarterly loss and better, albeit declining, sales.
Struggling online car seller Carvana, the day’s loser, tumbled 20.54% to $8.01 after its 2022 losses increased to $1.6 billion.