Wall Street opens in disarray, seeks direction ahead of earnings season

Wall Street ouvre en ordre dispersé, cherche une direction avant la saison des résultats
April 4, 2022
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April 5, 2022

Wall Street opens in disarray, seeks direction ahead of earnings season

New York (AFP) – The New York Stock Exchange opened on a mixed note on Monday, looking for direction to start the second quarter, ahead of the start of the earnings season in mid-April.

Around 2:00 p.m. GMT, the Dow Jones yielded 0.12%, the Nasdaq index, with strong technological coloring, took 1.13%, and the broader S&P 500 index, 0.34%.

“The market started the second quarter on a positive note (…) and is trying to line up two bull sessions,” wrote Patrick O’Hare of Briefing.com in a note.

For the analyst, Wall Street also reacted to the surprise announcement of Elon Musk’s stake in the capital of Twitter, seeing it as “a signal that there are investment opportunities in certain growth stocks”.

If “the market is in a waiting position before (the start of the earnings season), according to Peter Cardillo of Spartan Capital Securities, it should “rise gradually” by then.

“The war (in Ukraine) seems to play less” on the market, as the publications of companies approach, advances Peter Cardillo.

Among the news expected this week, the publication on Wednesday of the minutes of the last meeting of the monetary policy committee of the American Central Bank (Fed).

The document could give new indications on the intentions of the central bankers in terms of monetary tightening.

On Saturday, the chairman of the New York branch of the Fed, John Williams, pleaded for the Federal Reserve to begin reducing its balance sheet as soon as the next meeting of the monetary policy committee, on May 3-4.

This would be a major step in the US monetary trajectory, at least as important as the rate hikes.

For Wells Fargo analysts, if the balance sheet reduction strategy turns out to be “much more aggressive than expected”, the yield curve could “flatten” even more, i.e. see rates short at the same level, or even higher, than those of the long term.

On Monday, 2-year yields remained above 10-year yields, an anomaly known as an inversion, which has only occurred twice in the past two decades and which some see as the harbinger of a recession, at horizon of at least one year, however.

For Oanda analyst Craig Erlam, investors fear that upcoming “super” rate hikes, half a point per meeting rather than the usual quarter point, will increase “recession risks”, which explains this inversion.

Several members of the Fed are due to speak publicly this week, which should give the market new clues.

On the side, Twitter was levitating (+19.56% to 47.00 dollars) after the announcement that the entrepreneur Elon Musk took a 9.2% stake in the capital of the social network. At the end of March, he had publicly asked Internet users, via Twitter, if they considered the creation of a new platform “necessary”.

Elon Musk’s surprise operation also benefited Meta (+2.67% to 230.85 dollars).

Investors resented the decision of Starbucks CEO (-4.94% to 86.97 dollars), Howard Schultz, to suspend the share buyback program, saying he wanted to invest “more” of the group’s profits “for the benefit of (of) employees” and its branches.

Hertz advanced (+4.50% to 22.07 dollars), while the vehicle rental company unveiled a partnership with the Swedish electric car manufacturer Polestar on Monday, which notably provides for the acquisition of 65,000 models over five years to strengthen its fleet.

After having already taken off on rumors to this effect on Friday, Chinese stocks listed on Wall Street soared again after the Chinese authorities accepted, on Saturday, the principle of audits carried out by approved, non-Chinese companies.

The Chinese online commerce platforms Alibaba (+3.58%), Pinduoduo (+8.46%) or JD.com (5.91%), were all up sharply.