Wall Street closes significantly lower

(New York) 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.

Updated yesterday at 5:21pm.

The Dow Jones index, which posted its worst session since mid-May, ended down 1.94% at 32,272.79 points. The tech-heavy NASDAQ fell 2.75% to close at 11,754.23 points, according to interim results, and the S&P 500 fell 2.38% to 4,017.82 points.

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 the Federal Reserve’s decision next week,” worried Wells Fargo analysts as the Fed holds its currency meeting next Tuesday and Wednesday and is expected to raise interest rates by another 50 basis points, according to the Fed market expectations.

The other source of nervousness comes from the European Central Bank (ECB), which plans to hike rates by a quarter point in July, halt its asset purchases and likely make another 50 basis point hike in September,” Mr 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%).

On the stock market, the big names in the technology sector, so-called growth stocks that are vulnerable to rising interest rates, fell sharply, such as Apple (-3.60%), Amazon (-4.15%) or Netflix (-4.96%).

Manufacturers of microprocessors, which had experienced an upward trend the previous day, have largely lost ground, such as AMD (-3%) or Nvidia (-3.22%).

Department store chain Target, which had sounded the alarm on consumer demand this week, fell further (-1.37%) despite announcing a dividend increase.

Five Below, a discount chain, also fell 1.37% after sharply reducing its full-year sales and earnings guidance.

The stock of Novavax Laboratories, whose US health officials nevertheless recommended the green light for the vaccine against the coronavirus earlier in the week, fell 17.22 percent to $41.48. The health authority FDA announced on Thursday that the decision to review changes in the manufacturing process had been delayed.

Tesla fell 0.89% late in the session to $719.12 after rising nearly 4% on the day.

Skillsoft, a company that provides digital training, tumbled 19.24% as its declining quarterly revenue disappointed Wall Street.

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