Stock market: Wall Street down, interest rates up

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MARKET OVERVIEW. The New York Stock Exchange ended Thursday sharply lower, weighed down by the ECB’s monetary tightening decisions but also by fears of an announcement of US inflation on Friday, stubbornly held up in May.

Consult market news (again).

Stock market indices at close of trading

In Toronto, the S&P/TSX fell 228.54 points (-1.10%) to 20,563.89 points.

In New York, the S&P500 fell 97.95 points (-2.38%) to 4,017.82 points.

the Nasdaq fell 332.04 points (-2.75%) to 11,754.23 points.

the DOW closed 638.11 points (-1.94%) at 32,272.79 points.

the loons closed at $0.0093 (-1.1667%) at $0.7873.

the oil closed at $0.95 (-0.78%) at $121.16.

gold down $6.10 (-0.33%) to $1,850.40.

the Bitcoin closed at $75.69 (-0.25%) at $30,126.32.

the context

10-year Treasury bill yields, which move inversely to their price, remained tight at over 3.04%.

“First and foremost, we see a prelude to inflation data on Friday, which is making the market really nervous,” said Peter Cardillo of Spartan Capital Securities.

Analysts expect US CPI CPI to remain strong last month, rising 0.7% over the month (after +0.3% in March) and 8.3% over 12 months.

“This report could have implications for next week’s Federal Reserve decision,” worried analysts at Wells Fargo as the Fed holds its currency meeting next Tuesday and Wednesday and is expected to hike interest rates again by 50 basis points, according to market expectations.

“The other nervous factor comes from the European Central Bank (ECB), which plans to hike interest rates by a quarter point in July, halt its asset purchases and likely make another 50 basis point hike in September,” Peter Cardillo said.

Furthermore, the ECB’s new economic forecasts show that inflation is set to rise to 6.8% this year, while euro-zone GDP is expected to grow by just 2.8% in 2022, a curve profile resembling stagflation.

“In summary, the market is focused on central banks’ fight against inflation,” concluded the Spartan Capital analyst. A concern shared by Schwab’s experts: “The continuing rise in prices and the decision by central banks worldwide to tighten their monetary policy are fueling fears of a recession.”

Wall Street indices, which had started slightly lower, gradually faltered during the session before accelerating their decline towards the close, with moves being amplified by weak trading volume.

All S&P sectors are in the red, from communications services (-2.75%) to consumer staples (-1.50%) to real estate (-2.29%) and banks (-2.61%).

In the market, the big names in technology, so-called growth stocks that are sensitive to rising interest rates, fell sharply Apple (AAPL) (-3.60%), Amazon (AMZN) (-4.15%) or Netflix (NFLX) (-4.96%).

Microprocessor makers, which had been on an uptrend the previous day, largely lost ground AMD (AMD) (-3%) or NVIDIA (NVDA) (-3.22%).

The department store chain Target (TGT)which sounded the alarm on consumer demand this week continued to fall (-1.37%) despite announcing an increase in its dividend.

Five below (FIVE)a discount chain, also fell 1.37% after sharply trimming its full-year sales and earnings guidance.

The title of the lab Novavax (NVAX), whose U.S. health officials recommended the coronavirus vaccine go-ahead earlier this week, fell 17.22% to $41.48. The health authority FDA announced on Thursday that the decision to review changes in the manufacturing process had been delayed.

Tesla (TSLA) fell 0.89% late in the session to $719.12 after rising almost 4% on the day.

Skillsoft (SKIL)a company that provides digital training plunged 19.24% as its declining quarterly revenue disappointed Wall Street.

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