Wall Street ends on a contrasting note with the rise in rates

The New York Stock Exchange ended on a mixed note Tuesday, with rising interest rates benefiting some stocks and penalizing others.

The Dow Jones gained 0.55% to 35,813.80 points and the S&P 500 index expanded 0.17% to 4,690.70 points, while the Nasdaq fell 0.50% to 15,775.14 points.

“The main point of attention is on interest rates,” summed up Sam Stovall, head of investment strategy at CFRA.

The bond market thus continued to digest the renewal on Monday of the President of the American Central Bank (Fed), Jerome Powell, whose confirmation by the Senate should only be a formality.

This choice opens the way, for many operators, to a possible acceleration of the normalization of American monetary policy, which began this month.

The average rate on US government bonds on average maturities of 2 to 7 years has returned to its highest since the very start of the coronavirus pandemic.

As for the 10-year rate, it has taken 14 basis points (0.14 percentage point) since the close on Friday, to now stand at 1.68%.

“These higher rates have penalized growth sectors, especially technology,” said Sam Stovall.

Among them, Meta (ex-Facebook), down 1.10% to $ 337.25, Microsoft, which lost 0.63% to $ 337.69, or the dematerialized customer relations platform Salesforce (-1, 83% to $ 291.42).

Conversely, bank stocks are benefiting from this high interest rate environment, which is likely to improve their margins. JPMorgan Chase (+ 2.39%), Bank of America (+ 2.64%) or Wells Fargo (+ 2.11%) had a good run on Tuesday.

Moreover, even if it aimed to calm the market, the announcement of the coordinated use of strategic oil reserves by President Joe Biden in no way penalized oil stocks, quite the contrary.

ExxonMobil (+ 2.63% to 63.13 dollars), ConocoPhillips (+ 2.63% to 73.78 dollars) or Chevron (+ 2.10% to 116.30 dollars) all had a session removed, in tune the price of black gold, sharply rising.

The Chinese electric vehicle maker XPeng, listed on Wall Street, benefited (+ 8.25% to 51.30 dollars) from the publication of a turnover above the consensus of analysts as well as a loss of less than what was expected.

The group managed to deliver more vehicles than expected in the third quarter, which pleased investors, and expects 34,500 to 36,500 deliveries in the fourth quarter.

XPeng’s price is approaching its highest level and the manufacturer is now valued at around 45 billion euros.

Elsewhere on the board, the chain of electronics stores Best Buy slipped (-12.31% to 121.01 dollars) despite the announcement of earnings and quarterly figures above expectations.

The market has especially retained the forecasts for its fourth quarter (from November to January), considered disappointing. The chain faces, like the entire sector or almost, supply difficulties.

Same sanction for the clothing group Abercrombie & Fitch (-12.59% to 41.12 dollars), whose results are above forecasts, but which was dropped by investors.

The company has deteriorated profit margins against it, following the sharp rise in the price of transport and additional costs linked to disruptions in the supply chain.

Also in distribution, the chain of low-cost stores Dollar Tree took the opposite view (+ 9.17% to 114.71 dollars) thanks to the revaluation of its reference price.

Anchored for 35 years at one dollar, hence its name, this price will rise to 1.25 dollars for a multitude of items, a sign of the irresistible surge in inflation.

The Zoom online video conference platform was pilloried (-14.71% to 206.64 dollars) despite having published Monday, after market close, a turnover and a net profit higher than expectations.

As is often the case, Wall Street was looking ahead and hardly tasting the forecasts for the fourth quarter, which were lower than analysts’ projections.


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