(New York) The New York Stock Exchange opened sharply lower on Wednesday, in shock after an acceleration in inflation in the United States which casts doubt on the very idea of a rate cut this year by the bank American central (Fed).
Around 10 a.m. (Eastern time), the Dow Jones fell 1.13%, the NASDAQ index lost 0.89% and the broader S&P 500 index lost 0.94%.
“The tone of the stock market changed abruptly after the publication of the CPI price index for March,” Patrick O’Hare of Briefing.com commented in a note.
Consumer prices rose 3.5% year-on-year in March, more than the 3.4% projected by economists. Even more worrying, the basic index, that is to say excluding food and energy, came out at 3.8% over one year, above the expected 3.7%.
“How can the Fed lower rates if inflation rises? asked Adam Sarhan of 50 Park Investments. “The very idea of a decline in 2024 is being called into question, and now the market is adapting to this new reality. »
After this publication, bond rates were catapulted upwards.
The yield on 2-year US government bonds, representative of operators’ expectations in terms of monetary policy, came close to 5%, a threshold it has not seen for almost five months.
The 10-year rate stood at 4.48%, and even briefly crossed the symbolic threshold of 4.50%.
Operators now assign a probability of more than 40% to the scenario including a single Fed rate cut this year, while they were betting on six or even seven cuts in early 2024.
Despite this unpleasant surprise, “the market can accept a year 2024 without any rate cut,” said Adam Sarhan, “because the economy is vigorous and company results are expected to rise. But in the short term, he will have to reposition himself a little. »
The promise of high rates for a long time weighed down most of the major stocks in New York, in particular Goldman Sachs (-2.51%), the DIY store chain Home Depot (-2.51%).
But after the first hiccup, the indices began to cut their losses.
Delta Air Lines gained altitude (+2.38%) after the publication of results better than expectations, coupled with forecasts higher than analysts’ figures for the current quarter. According to general manager Ed Bastian, bookings are strong as summer approaches.
This communication also benefited Delta’s competitors, notably American Airlines (+0.93%) and United Airlines (+1.90%).
The video game publisher Roblox stood out (+3.04%) after the platform with 71 million daily users reached an agreement with the online advertising specialist PubMatic for the launch of advertising videos on its site This year.
Macy’s fell (-1.12%), after announcing the appointment of two new administrators as part of its agreement with the investment company Arkhouse Management, whose offers to buy the store chain were rejected.
Boeing remained on a downward trend (-1.22%), the day after the publication of accusations from a group engineer, who claims that the manufacturer took liberties with safety requirements during the assembly of 787s. Dreamliner and 777.
Alibaba was sought after (+1.26%) after co-founder Jack Ma expressed his satisfaction to the current leaders of the Chinese e-commerce group, seduced by their dynamic approach at a pivotal period for the group of which he still controls nearly 4% of the capital.