(New York) The New York Stock Exchange ended sharply lower on Monday, worried about the reaction of the American central bank (Fed) to better than expected macroeconomic data.
The Dow Jones fell 1.40%, the NASDAQ index fell 1.93% and the broader S&P 500 index dropped 1.79%.
Already badly oriented even before the opening, Wall Street recently welcomed the publication of the ISM activity index in services for the month of November in the United States, which came out at 56.5%, well above of the expected 53.7%.
“The service sector is holding up better than the manufacturing industry, which is more sensitive to financial conditions” and to rising interest rates, responded Kieran Clancy of Pantheon Macroeconomics.
The ISM index is in line with the US employment report published on Friday, which reported 263,000 job creations, against only 200,000 expected by economists.
Faced with this data, investors now expect the Fed’s key rate to go higher than expected, which increases the likelihood that the economy will slow down, according to Art Hogan of B. Riley Wealth. Management.
The general impression was reinforced by an article in the Wall Street Journal according to which the Fed could raise its key rate further, beyond 5%, and keep it at a high level for longer.
The author of the article, Nick Timiraos, successfully predicted the last four decisions of the Fed’s Monetary Policy Committee on its key rate, in June, July, September and November.
The yield on 10-year US government bonds rose sharply to 3.59% from 3.48% on Friday.
On Monday, the spread between the 2-year rate and the 10-year rate, with the former above the latter, reached its highest level in 41 years, indicating that operators are seeing the pace of growth slowing sharply at middle term.
In addition, after having long welcomed the easing of health restrictions in China, the New York market expects “that this will increase the demand for raw materials, which could be inflationary”, according to Art Hogan.
Overall, after gaining nearly 15% from an early fall low, the S&P 500 is struggling to find a second wind.
On the stock market, Tesla suffered (-6.37% to 182.45 dollars), weakened by the information that the electric vehicle manufacturer has decided to reduce production of its model y in China, due to high stocks. and sluggish demand in this market.
Still in the technology department, Amazon (-3.37%), Microsoft (-1.89%) and semiconductor manufacturer Broadcom (-1.88%), which publishes its results on Thursday, were all penalized.
Rolled for more than a year due to a regulatory tightening and the zero-COVID-19 policy of the authorities, Chinese stocks listed on Wall Street have continued to rise, like online trading platforms. Alibaba (+0.51%) and JD.com (+0.92%).
Activision Blizzard climbed (+0.75% to 76.33 dollars), while, according to the New York Post, dissension would emerge within the American Competition Authority (FTC) as to whether to challenge or not the takeover of the video game publisher by Microsoft.
The VF Corporation group, which notably owns the Van’s and Timberland brands, fell (-8.16% to 28.93 dollars), after a profit warning, attributed to a slowdown in demand in North America, but also in Europe and China. The stock was also affected by the surprise announcement of the departure of CEO Steve Rendle.
The shadow of the Fed also weighed on the black gold, which fell despite the entry into force of the European embargo and the capping mechanism, both of which targeted Russian oil.
The movement penalized the entire sector, in particular ExxonMobil (-2.74%), Chevron (-2.47%) or Halliburton (-5.27%).
The Toronto Stock Exchange closes lower
Canada’s main stock index closed nearly 1.2% lower on Monday as oil prices fell while U.S. markets fell even further. Signs of increased business activity have rekindled fears about the path of higher interest rates ahead.
The Toronto floor’s S&P/TSX Composite Index fell 243.40 points to 20,242.26 points, as energy and information technology stocks weighed.
In the currency market, the Canadian dollar traded at an average price of 73.90 cents US, down from its average price of 74.25 cents US on Friday.
The Canadian Press