(New York) The New York Stock Exchange was undecided on Tuesday during an intervention by the President of the American Central Bank (Fed) Jerome Powell, who was to be questioned in the Senate on the institution’s strategy to fight inflation in the United States .
Around 10:10 am, the Dow Jones dropped 0.61%. The NASDAQ, hovering between green and red, gained 0.20% and the extended S&P 500 index was down 0.36%.
Monday, anxious about inflation, Wall Street had however limited the losses. The Dow Jones index had dropped 0.45% to 36,068.87 points. The NASDAQ finished narrowly in positive territory at 14,942.83 points (+0.05%), after plunging nearly 3% in the session. The S&P 500 lost 0.14% to 4670.29 points.
In a pre-prepared speech to a Senate committee, the Fed chairman promised “to do everything possible” during his second term to fight inflation in the United States.
“We will use our tools to support the economy and a strong labor market and to prevent inflation from taking hold,” he said.
During this confirmation hearing for his second term at the head of the powerful Central Bank, Jerome Powell should come under fire from the questions of elected officials, very concerned about persistent inflation, in the Republican camp as in the Democratic camp.
The government released the price index (CPI) for December on Wednesday, which made markets nervous as inflation could have hit 7% year-on-year last month, some forecasters said.
“Investors will listen to any question relating to the normalization of monetary policy” and any detail concerning the pace of interest rate hikes, said Patrick O’Hare of Briefing.com.
“In recent times, the markets have experienced some downward volatility due to rising bond yields against rising inflationary pressures,” noted Schwab analysts. “This has raised expectations that the Fed and other world central banks will accelerate monetary tightening,” he added.
“The market now anticipates three rate hikes (by a quarter of a percentage point) in 2022 and the first of them in March,” says Art Hogan of National Securities.
On Tuesday, bond yields, which had climbed the previous day to 1.80%, a two-year high, stabilized at 1.76%.
Listed, several titles reacted to new estimates of results while the season of quarterly accounts will open Friday with the banks.
The chain of drugstores and pharmacies CVS rose 1.20% to 106 dollars after having significantly raised its forecast of results for the fourth quarter and 2021. The title of its competitor Walgreens followed (+ 0.37%).
Abercrombie and Fitch shares climbed 5.09% to $ 34 after indicating that its 2021 revenue would be nearly 20% higher than in 2020. But like its rival Lululemon (-1.31 %) the day before, which complained about the impact of the Omicron variant on footfall and sales, the clothing group also warned that it was experiencing stock problems and delivery delays.
Some banks, to which a more sustained interest rate environment is favorable, were on an upward trend, such as Citigroup (+ 1.37%) or Wells Fargo (+ 0.30%).
But ten of the eleven sectors of the S&P were in the red, starting with real estate (-1.09%) which fears more expensive loans and consumer products (-1.01%) sensitive to inflation. .
Energy continued to rise (+ 0.79%) in the wake of higher crude prices.