The “Bull of Wall Street” in New York, February 17, 2021 (AFP / Angela Weiss)
The Nasdaq, an index with strong technological coloring of the New York Stock Exchange, fell sharply on Monday in a market increasingly concerned about the rise in rates on US bonds at 10 and 30 years.
The Nasdaq lost 2.46% to 13,533.05 points and the S&P 500 extended index fell 0.78% to 3,876.50 points.
The index of flagship stocks, the Dow Jones Industrial Average, however, gathered 0.09% to 31,522.09 points.
“If the 10-year rate continues to rise, it could lead to a correction in the stock market,” warns Peter Cardillo of Spartan Capital Securities.
The 10-year rate on US Treasuries moved to 1.3653% (+ 2.16%) around 9:25 p.m. GMT after reaching a peak overnight from Sunday to Monday at 1.3925%, a high in one year.
The 30-year bond yield was also up, standing at 2.1770% (+ 2.04%).
This movement seems to indicate, according to several experts, that the market is preparing for inflation in the United States this year.
“Easy access to liquidity and low interest rates are always a good thing for the equity market,” says Cardillo. “This allows companies to compete to pay the best dividends.”
“But when this is reversed, it costs more for companies to borrow and finance their projects”, adds the expert.
Requiring significant development costs and relying heavily on their growth prospects, companies in the technology sector were particularly hard hit by this rise in Treasury bill rates.
Apple (-2.98%), Alphabet (-1.65%) and Amazon (-2.13%) all lost ground. Tesla, for its part, fell 8.55%.
The peculiarity of the current situation, underlines Mr. Cardillo, is that the rise in bond yields will not necessarily be accompanied by an increase in key rates by the Federal Reserve (Fed).
The US central bank has indeed made it known that it does not plan to raise its rates, currently in a range between 0% and 0.25%.
Its president, Jerome Powell, must also speak on Tuesday about monetary policy in front of American senators, then the next day in front of elected representatives of the House of Representatives.
Among the values of the day, Boeing stock fell 2.11%. The aircraft manufacturer has ordered the grounding of all Boeing 777 commercial planes, equipped with the engine model involved in the spectacular engine fire on an aircraft over Colorado on Saturday, that is, 128 aircraft.
The company United Airlines, victim of the incident, had previously declared to have voluntarily withdrawn 24 Boeing 777 from the service. Its stock rose 3.48%.
In addition, several listed groups benefited from acquisitions, including the tire manufacturer Cooper Tire (+ 29.40%), which announced its acquisition by rival Goodyear Tire (+ 21.05%) for $ 2.8 billion. , and People’s United Financial (+ 14.92%), which will be acquired by M&T Bank (+ 3.53%) for $ 7.6 billion.
Among the other values of the day, the video game store chain GameStop, at the heart of the stock market saga at the start of the year and a brief movement of panic on Wall Street at the end of January, saw its share climb by 13.33 %.
Ahead of the weekend, Keith Gill, who rose to fame on Reddit and YouTube for betting upside on GameStop stock as many investment funds saw it crash, shared a capture from screen showing that he has acquired an additional 50,000 shares of the company.
dho / juj / sr