Wall Street ends lower, concerned about rates and the Fed

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New York (AFP) – The New York Stock Exchange ended lower on Tuesday, in a market worried about the global rise in rates, the monetary policy decision of the American central bank (Fed) expected for Wednesday, and their impact on the economic situation.

The Dow Jones lost 1.01%, the Nasdaq index lost 0.95% and the broader S&P 500 index lost 1.13%.

For analysts at Briefing.com, “the most important factor” in the orientation of the session will have been the continuation of the rise in bond rates.

The yield on 10-year US government bonds soared to 3.60%, a first since April 2011.

The 2-year rate, more representative of market expectations in terms of monetary policy, came close to 4% (3.98%), a threshold that it has not crossed for nearly 15 years.

This escalation in rates overshadows technology stocks, exposed to tougher financing conditions, on which they depend to fuel their growth. Amazon (-1.98%) and Alphabet (-1.95%) paid the price.

Apple has done well (+1.57% to 156.90 dollars), analysts at Wedbush Securities reporting the “rapid” pace of sales of the new iPhone 14, which arrived on the market at the end of last week. The group also benefited from the announcement of a rise in its prices in several countries in Asia and Europe.

“The market is in a waiting position,” commented Adam Sarhan of 50 Park Investments. “He is patient before seeing what the Fed will do”, which is to announce its monetary policy decision on Wednesday, after a two-day meeting.

Operators are mainly counting on an increase of 0.75 percentage point in the institution’s key rate, which would bring it to a range of 3% to 3.25%.

Investors fear that the Fed’s determination in its fight against inflation will precipitate the American economy into a recession.

Among the few macroeconomic indicators of the day, operators noted that building permits had slowed significantly in the United States in August.

The mood was further clouded by a warning from Ford, which reported after trading on Monday that its third-quarter results were set to suffer from a billion-dollar cost hike.

The manufacturer nevertheless confirmed its forecast for net profit before tax and interest for the full year.

The brutal reaction of the New York market (the title lost 12.32%), while analysts were rather measured about this announcement, testifies to the extreme nervousness of Wall Street.

On Friday, the courier group FedEx (-3.38% to 157.40 dollars) had already published, in advance, results below expectations, citing a slowdown in its volumes around the world.

“It changes the dynamic” in terms of earnings and market forecasts, explained Adam Sarhan. “The market is looking for news that can support it and it is having a hard time finding it,” he said.

On the side, the specialist in technology applied to the health sector Change Healthcare jumped (+6.44% to 27.11 dollars) after the validation, by a federal judge in Washington, of its takeover by UnitedHealth (-0 .14% to 522.80 dollars), which the US Department of Justice wanted to prevent for fear of distortion of competition.

Ford’s warning weighed on its great rival General Motors (-5.63% to 39.06 dollars), although the latter announced on Tuesday an order for 175,000 of its electric vehicles from the car rental company Hertz.

The sports equipment manufacturer Nike fell (-4.47% to 102.42 dollars) after a lowering of the recommendation of analysts from Barclays, citing too high stocks and a slowdown in demand in China.

The weather remained stormy for the cryptocurrency universe, in this context of general caution, and Coinbase (-2.85%), Block (-3.52%) or Riot Blockchain (-4.60%) all backed down

Wall Street ends lower, concerned about rates and the Fed