(New York) The New York Stock Exchange opened sharply in the red on Thursday following central bank rate hikes and disappointing US indicators.
The Dow Jones index dropped 1.88%, the NASDAQ plunged 2.27% and the broader S&P 500 index yielded 2.03% around 10 a.m. (Eastern time).
On Wednesday after the Fed hiked rates by half a percentage point and bleaker forecasts for the economy, the Dow Jones index fell 0.42% to 33,966.35 points.
The tech-heavy NASDAQ fell 0.76% to 11,170.89 points and the S&P 500 lost 0.61% to below 4,000 points at 3,995.32.
In addition to the Fed, which tightened its rates for the seventh time this year, it was the turn of the European Central Bank (ECB) on Thursday to raise its own by 50 basis points, which was expected by the markets.
But his message came across as more “warmongering,” as Claus Vistesen of Pantheon Macroeconomics called it.
The ECB has warned that it will continue to tighten monetary policy and has revised its inflation projections upwards, the analyst said. Its president Christine Lagarde also pointed to short-term risks to growth.
The Bank of England, which is fighting against inflation that is close to 11%, also raised its key rate on Thursday.
On the bond market, reacting to these fears of a global slowdown, yields on 10-year Treasury bills fell to 3.45% against 3.47% the day before.
On the side of the Fed, the message delivered Wednesday by its monetary committee attests “that it should not be expected to change the course of its monetary policy” in 2023, summarized Art Hogan of B. Riley Wealth Management.
“In addition to the rate hikes, officials signaled a higher final rate in 2023,” likely above 5%, which has chilled investors, the analyst continued.
Overnight rates, which are now between 4.25% and 4.50%, dictate the cost of all other credits. Fed members “expect a less robust economy next year as well as inflation that will take longer to slow down,” Hogan added.
As if to echo these concerns, several US indicators disappointed. Retail sales in the United States fell more than expected in November in the United States, mainly weighed down by car sales and the construction sector. They fell 0.6% when analysts expected a decline of only 0.1%.
Manufacturing activity in the highly industrialized region of Philadelphia remained in contraction in December, for the fourth month in a row, and that of the New York region fell back into the red after rebounding in November.
Finally, industrial production in November, measured by the Fed, slowed by 0.2% over one month, including -0.6% for manufacturing activity alone.
“With weak global growth, a strong dollar, and momentum in domestic activity dampened by interest rates, it’s safe to say that this weakness in industrial production is a sign of what lies ahead,” Andrew said. Hunter, economist for Capital Economics.
On the stock market, Tesla, which has dropped a lot of ballast in recent sessions, was regaining strength while its founder and leader Elon Musk sold again at the start of the week, according to a document submitted to stock market authorities, for 3.6 billion dollars. additional shares of the electric car manufacturer.
The big names in the technology sector, very sensitive to rate increases, blamed the blow like Meta (Facebook) which lost 3.87%, Microsoft (-2.04%) or Netflix (-7.14%). The depression in retail sales also affected Amazon, the number of online distribution (-2.67%).
Faced with signs of a slowdown in activity, airlines had lead in aid like Delta (-3.24%) or American Airlines (-2.38%).