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MARKET OVERVIEW. Wall Street enjoyed another sharp decline on Monday, shedding the frenzied optimism of the past two months to focus on the Federal Reserve’s (Fed) continuation of rate hikes and a much-anticipated speech by its President on Friday.
The Toronto Stock Exchange suffered another day of triple-digit losses on Monday as US markets also fell across the board on ongoing inflation fears.
Consult market news (again).
Stock market indices at close of trading
In Toronto, the S&P/TSX fell 136.46 points (-0.68%) to 19,974.92 points.
In New York, the S&P500 ended up 90.49 points (-2.14%) at 4,137.99 points.
the Nasdaq fell 323.64 points (-2.55%) to 12,381.57 points.
the DOW fell 643.13 points (-1.91%) to 33,063.61 points.
the loons fell $0.0034 (-0.4414%) to $0.7663.
the oil fell $0.10 (-0.11%) to $90.67.
gold declined $14.90 (-0.85%) to $1,748.00.
the Bitcoin fell $331.48 (-1.54%) to $21,158.02.
For Regent Atlantic’s Andy Kapyrin, the New Yorker square has taken profits coming after a hot summer and “a week ago that should be quite risky for stocks and bonds”.
Quiet on Monday in this regard, the week is punctuated by a few key macroeconomic indicators, notably Tuesday’s PMI activity indices for August, but also Friday’s PCE price index.
But the event of the week is apparently Fed Chair Jerome Powell’s speech at Friday’s annual Fed meeting in Jackson Hole, Wyoming.
“This is an opportunity for the Fed to send a clear message to markets” that the institution “always focuses on inflation and not economic risks,” Andy Kapyrin estimates.
Traders are now favoring a 0.75 percentage point hike in the Fed’s main interest rate at the next Fed policy committee meeting on Sept. 21-22, after long expecting a half-point hike.
This expected continuation of an unprecedented forced march that would take the US Federal Reserve interest rate to its highest level in 14 years weighed on tech stocks on Monday.
Amazon (AMZN) (-3.62%), Tesla (TSLA) (-2.28%), Meta (FB) (-2.92%) and Letters (GOOG) (-2.58%) illustrated the slump. Companies in the technology sector often need to borrow to fuel growth and generally struggle with tightening credit conditions.
“I expect that they will be abandoned as long as interest rates are relatively high,” says Andy Kapyrin.
However, the current cold spell is not limited to the technology sector and all values of the Dow Jones ended in the red on Monday.
Only a few defensive stocks that are less sensitive to the economy, such as health insurers United Health (UNH) (-0.68% to $544.57), the Dow Jones’ highest weight, fluctuated somewhat.
“Nothing has changed at the macro level” compared to the situation in June, when Wall Street hit its yearly low, argued Baird’s Ross Mayfield. “I think we’re still in the right direction” on the stock side, “but maybe it was a bit premature to justify the momentum we’ve seen.”
On the side the cinema chain CMA (-41.95% to $10.46) suffered from the allotment of new securities to its existing shareholders as dividends and the announcement by competitor Cineworld that it is considering filing for bankruptcy.
The stock also suffered from the correction of the “same stocks” it belongs to, those moves that have been praised by smallholders since early 2021, often with no relation to the companies’ financial health or prospects.
Ford (F) has fallen sharply (-5.04% to $15.08) after being ordered to pay $1.7 billion in damages by a Georgia court on Friday. The jury found that a manufacturing defect in one of their pickup trucks played a role in the 2014 deaths of two motorists.
In addition, the manufacturer announced on Monday that it would cut 3,000 jobs, primarily in the USA, India and Canada.