Wall Street ends in the red after the Fed

New York (awp/afp) – The New York Stock Exchange concluded clearly in the red on Wednesday, weighed down by technology which received a mixed reception with the results of Alphabet and Microsoft but also by the Fed which dampened the hopes of a rate cut from March.

The Dow Jones index lost 0.82% to 38,150.30 points, the Nasdaq plunged 2.23% to 15,164.01 points and the S&P 500 fell 1.61% to 4,845.65 points.

The New York market nevertheless ended the month of January with a monthly gain, the third in a row.

Two of the “Magnificent Seven”, these tech mega-capitalizations, namely Microsoft (-2.69%) and Alphabet (-7.35%), were under strong pressure, following profit-taking. The two groups had announced results the day before at the close of the markets, although they were largely in line with forecasts.

“The losses in these stocks are not because the results or forecasts are bad,” explained Patrick O’Hare of Briefing.com. “This is because expectations were extremely high and these titles were showing huge gains before their releases,” he added.

For Alphabet, investors focused on Google’s advertising revenues which came out weaker than expected. The group nevertheless generated a quarterly profit of $20.7 billion, higher than expectations.

The title of chip manufacturer AMD also lost 2.54%, on this profit-taking movement, despite better than expected turnover and profits in line with forecasts.

These sales of heavyweight Nasdaq stocks dragged the rest of the “Magnificent Seven” down, notably Apple (1.94%), Amazon (-2.39%) and Meta (-2.48%) whose results are expected on Thursday.

But the event of the day was the outcome of the Fed’s monetary meeting where as expected, the American central bank left its rates unchanged at their highest in 22 years between 5.25% and 5.50%.

The Monetary Committee has warned the market that it is seeking to have “greater confidence” in the sustained fall in inflation before considering rate cuts. The Fed estimates that price increases are still “high” and that “the economic outlook is uncertain.”

If Jerome Powell, the head of the Fed, admitted during his press conference that the cycle of rate increases had “probably reached its peak” and clearly ruled out the probability of a rate cut as early as March , as the stockholders still hoped.

“Mr. Powell virtually said there would be no change in rates in March. That was a disappointment for the market,” commented Peter Cardillo of Spartan Capital.

The Fed president nevertheless stressed that “almost all” the members of the monetary policy committee were in favor “of a rate cut this year”, specifying however that “the timing chosen for this will be linked to our confidence in the fact that inflation is on a sustainable trajectory towards 2%.”

“The market had already opened lower after the results of Microsoft and Google. The Fed added pressure on stocks,” underlined Mr. Cardillo.

Ten-year bond rates stood at 3.96% compared to 4.03 the day before around 9:00 p.m. GMT. Those at two years especially relaxed to 4.24% instead of 4.33% on Tuesday.

Elsewhere on the stock market, Boeing climbed 5.28%. The aircraft manufacturer announced a loss of $23 million in the fourth quarter, much less than analysts feared, on revenue of $22.02 billion.

After the torn door incident on an Alaska Airlines Boeing 737 MAX 9, which resulted in the grounding of numerous aircraft, the aircraft manufacturer decided not to make forecasts for the 2024 financial year.

The Paramount media group (CBS, MTV, Paramount studio) soared 5.28% after American tycoon Byron Allen made a $14.3 billion buyout offer.

Perceived as the smallest of the big players in television and streaming, Paramount Global has been the object of desire for many months.