WALL STREET ENDED LOWER
Par Lewis Krauskopf, Bansari Mayur Kamdar et Shreyashi Sanyal
(Archyde.com) – The New York Stock Exchange ended sharply lower on Tuesday as weaker-than-expected earnings from Goldman Sachs weighed on financials as big tech stocks continued to decline in the face of a rally. bond yields.
The Dow Jones index fell 1.51%, or 543.34 points, to 35,368.47 points.
The broader S&P-500 lost 85.74 points, or 1.84%, to 4,577.11 points.
The Nasdaq Composite fell for its part by 386.86 points (2.60%) to 14,506.90 points.
The Nasdaq, which saw the largest decline during the session, is now down around 9.7% from its record close on Nov. 19.
Goldman Sachs saw its stock tumble 7% after reporting fourth-quarter earnings below consensus due to weak trading activity.
In its wake, the financial sector fell 2.3%, weighing heavily on the S&P-500.
The yield on two-year US Treasury bills, the most sensitive to changes in policy rate expectations, jumped to stand above the 1% threshold while ten-year bills rose to a two-year high as traders brace for more aggressive action by the Federal Reserve (Fed) to fight inflation.
This rise in bond yields at the start of 2022 weighs particularly heavily on major technology stocks and high-growth stocks.
Data on soaring inflation “makes markets fear the Fed is going to act, so we’re seeing a rally in bonds,” said Mona Mahajan, strategist at Edward Jones.
“It is not just the rise in bond yields but the speed of this rise (…) which is causing a form of indigestion in the market”, in particular for the more speculative asset classes, he said. she stated.
Ten of the eleven major sectors of the S&P-500 ended in the red, including technology, which experienced the largest decline. Only the energy sector progressed, by 0.4%.
Investors have their eyes on the Fed’s monetary policy meeting next week, after which they hope to have more clarity on the US central bank’s measures to fight inflation.
A week before the Federal Reserve’s monetary policy meeting, the outlook for monetary policy tightening is once again at the forefront of investors’ concerns, with some analysts no longer ruling out a further acceleration of the end of asset purchases by the central bank ahead of the first rate hike expected in March.
According to data released last week, consumer prices in the United States rose year on year in December at their fastest pace in four decades.
On the value side, Activision jumped 26% in the wake of Microsoft’s announcement of the takeover of the video game publisher for nearly 70 billion dollars.
Other video game publishers, including Electronic Arts, have made progress.
Microsoft shares fell 2.4%.
(French version Jean Terzian)
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