Wall Street concludes down, new peak for bond rates

New York – The New York Stock Exchange, which moved up and down on Thursday, ended down, still under pressure by the rise in bond rates to a new high since 2007.

The Dow Jones index fell 0.75% to 33,414.17 points, the technology-dominated Nasdaq lost 0.96% to 13,186.18 points and the S&P 500 dropped 0.85% to 4,278 points.

Yields on ten-year bonds came close to 5%, at 4.99% during the session, a new high in 16 years.

“Rates are rising because the bond market fears that the Federal Reserve (Fed) will leave rates high for an extended period of time,” commented Peter Cardillo of Spartan Capital.

On the subject, Fed boss Jerome Powell blew hot and cold during a speech to the Economic Club of New York.

“There were both hawks and doves,” said the analyst, using the language of the Fed to designate the supporters of a more severe monetary policy and those of a more flexible policy.

Mr. Powell stressed that the monetary committee wanted to be “cautious”, “which is an indication that the Fed is in no hurry to raise rates further”, estimated David Daco, chief economist at Ernst and Young.

On the other hand, Mr. Powell also insisted that monetary policy “is not too tight at the moment” and that the American economy appears “resilient.”

“We think that the Fed is done with its rate increases but a reduction in these rates will not occur before June 2024,” concluded David Daco.

In terms of indicators, there was also something for everyone.

On the one hand, weekly applications for unemployment benefits fell, to the surprise of analysts, falling below the 200,000 mark. This could reflect a still tight labor market.

On the other hand, due to high interest rates which are driving up the cost of real estate loans, sales of existing homes have fallen to their lowest level since October 2010.

Last month, 3.96 million houses and apartments changed ownership, at an annualized rate, according to data released Thursday by the National Federation of Realtors (NAR).

This represents a decrease of 2% compared to August, and 15.4% compared to September 2022.

On the value side, Tesla (-9.30% to $220) dragged the Nasdaq down.

The electric vehicle manufacturer unveiled third quarter results on Wednesday evening that were lower than forecasts, whether for profit or turnover, which stood at $23.35 billion (+9%).

The group led by Elon Musk has been weighed down by an increase in its production costs. Net profit came to $1.85 billion, a drop of 44% year-on-year. Elon Musk blamed high interest rates for multiple price cuts on his vehicles that squeezed his margins.

Netflix, on the other hand, soared 16.05% to $401.77. Its quarterly results were much better than expected.

The streaming giant gained nearly 9 million new subscribers (+10.8%), shattering forecasts. The group attributes this success to the offering of its content but also to the success of its new pricing for accounts shared between several users.

Regional banks had a bad day in the wake of the fall in Zions Bancorporation’s stock, which plunged 9.67%. The Salt Lake City-based bank announced during its results presentation that the cost of paying deposits had increased tenfold with the rise in rates.