Very undecided, the New York Stock Exchange moved in dispersed order in the morning on Thursday, after the drop in technology stocks the day before, jostled by a Fed more pessimistic about inflation, pushing bond rates to the highest since the start of the pandemic .
At 3:40 pm GMT, the Nasdaq index, with a strong technological coloring, nibbled 0.16% while it had lost more than 1% at the opening. The day before, it had plunged 3.34% Wednesday to 15,100.17 points.
The Dow Jones fell 0.22% after losing 1.07% to 36,407.11 points on Wednesday.
The extended S&P 500 index advanced 0.12% after -1.94% the day before to 4,700.58 points.
Rates on 10-year U.S. Treasuries climbed to 1.73%, hitting highs since the start of the pandemic.
“Investors are readjusting their portfolios to a new era of money + not easy + as we emerge from an era of easy money”, summed up Peter Cardillo, of Spartan Capital Securities to explain the mood of investors the day before.
The publication of the minutes of the last meeting of the Fed’s monetary policy committee weighed down the market on Wednesday. Its members have said, in unequivocal language, that they now plan to raise the institution’s key rate earlier and more often than expected.
In addition, it is now a question of starting to reduce the Fed’s balance sheet immediately after the first rate hike. This means that the Fed will invest even less in bonds, which could be seen as another monetary tightening of the screw by the markets.
Growth stocks, like that of tech, “are facing the specter of a tougher Fed, with a new desire to control inflation,” said Patrick O’Hare of Briefing.com.
Higher rates increase the cost of money for developing companies which must invest heavily and therefore make them less attractive.
“Yesterday’s strong pullback following the Fed report shows that its Central Bank monetary tightening campaign could be more severe than previously thought,” Schwab analysts said.
The big names in tech, very volatile, continued to lose ground like Apple (-0.42% after -2.66% Wednesday).
Alphabet regained ground (+1.27 to 2,786 dollars) after being shed 4.68%. But Netflix dropped 2.86% to $ 551. Tesla also fell 3.53% to 1,050 dollars after -5.35% the day before.
In economic data on Thursday, weekly jobless claims rebounded in the United States during the last week of 2021, while remaining at a very low level as employers face a shortage of workforce.
From December 26 to January 1, 207,000 people registered as unemployed, 7,000 more than the previous week. It is also more than the 198,000 expected by analysts.
Witnessing strong demand from the US economy, the US trade deficit widened much more than expected in November as a result of record goods imports, the Commerce Department said.
The deficit of goods and services with the rest of the world amounted to 80.2 billion dollars, an increase of 19.4% compared to the previous month.
Half of the S&P 500 sectors remained in positive territory as traditional economy stocks regained favor with investors.
“Energy is on the rise again, banks and industrial stocks,” said Peter Cardillo. Citigroup and Wells Fargo took more than 1%.
In contrast, the FMCG sector, sensitive to more stubborn inflation prospects, fell 1.41% followed by materials and information technology.