Wall Street opens sharply lower, hangover after the Fed – 05/05/2022 at 16:20

Wall Street Celebrates Fed Decision Stricter Than It Feared - 05/04/2022 at 22:44

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The New York Stock Exchange opened sharply lower on Thursday, recovering from the euphoria that followed Wednesday’s announcement of a significant increase in Fed interest rates and comments by its president.

Around 2:00 p.m. GMT, the Dow Jones fell 1.44%, the Nasdaq index with a strong technological color, 2.60%, and the broader Nasdaq index 1.76%.

On Wednesday, the market reacted positively, not so much to the announcement of a half-point increase in the key interest rate of the US central bank (Fed), which has already been priced by investors, as to the statements of its president, Jerome Powell. .

The director specifically ruled out the prospect of an increase of 0.75 points in a future meeting.

Within hours, operators had completely reconsidered their expectations and calculated on Thursday zero chance of rising at least 0.75 points in the next meeting, in June, when they rated it at 99% on Wednesday before the Fed meeting. Contact.

“It was catalyzing to hear that an increase of + only + half a degree was possible,” Patrick O’Hare of Briefing.com said in a note.

For the analyst, some of the players also seem to believe, in light of Wednesday’s decisions and comments, that the Fed “can bring inflation under control without dragging the economy into recession.”

However, after this collective relief, “the market wakes up and realizes that none of the structural problems that led it to collapse have been resolved,” said Adam Sarhan of 50 Park Investments.

“Inflation remains high,” he said. “The Fed will continue to raise interest rates and the picture of slow growth has not changed.”

The indicators were not helped by two bad indicators, the first reported a slight increase, higher than expected, in the weekly unemployment applications, the other a decrease in productivity in the United States in the first quarter.

In the bond market, after a sudden relaxation in the aftermath of Jerome Powell’s press conference, interest rates rose again on Thursday.

The yield on 10-year US government bonds thus exceeded the symbolic limit of 3%, which had already exceeded for a while on Monday, for the first time since the end of 2018.

For Adam Sarhan, investors are afraid to watch a “recession” of Wall Street-listed companies, a variant of the slowdown already operating in the United States.

A sentiment fueled by the cautious, even frankly pessimistic, forecasts of several companies that released their quarterly results on Wednesday and Thursday, particularly in the e-commerce sector.

Thus, the e-sales site eBay fell (-7.17% to $ 50.52) despite sales and profits above the Wall Street consensus, with observers mainly maintaining the group’s forecast for the second quarter. lower than those on the market.

The e-commerce platform Shopify also collapsed at the beginning of trading (-17.61% to $ 399.99), after the publication of a much lower turnover than expected, as well as a significantly higher loss.

Another e-commerce site, Etsy, dedicated to craftsmen, was also penalized (-16.24% to $ 91.57), despite the expected results for its disappointing forecasts, which are based on a drop in activity.

Twitter benefited (+ 3.59% to $ 50.82) from the communication of Elon Musk, who managed to raise $ 7 billion from investors to finance the acquisition of the platform.

This amount, raised by funds and wealthy investors, such as businessman Larry Ellison or Saudi Prince Al-Walid ben Talal, will help reduce the amount borrowed by banks for the business.

The New York Stock Exchange NYSE parent company Intercontinental Exchange (ICE) recorded sales (-3.02% at $ 106.54) after announcing, on Wednesday after the stock exchange, the imminent acquisition of the IT specialist in the real estate sector, Black Knight, for $ 13.1 billion.

Snap (-5.92%), Meta (Instagram parent company, -4.47%) or Alphabet (YouTube parent company, -3.84%) were reversed after their toughest competitor, TikTok, revealed on Wednesday that it would create an advertising revenue sharing system with the platform’s most popular creators.

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