Wall Street under pressure, in the first session of May, and after the April thud, which saw the Nasdaq collapse by 13.26%, ending the worst month since October 2008.
Netflix lost 49% in April, Amazon and Meta left 24% and 10.8% respectively on the ground.
The Dow Jones Index lost 4.9%, and the S&P 500 sank 8.8%: both indices reported the worst month since March 2020, when the alarm sounded around the world. Covid-19 pandemic.
The last session in April confirmed the strong sell-off phase: the S&P 500 fell 3.63% last Friday, bringing back the worst session since June 2020 and ending its fourth consecutive week in negative territory, for the first time since September 2020. Fourth consecutive week in the red also for Nasdaq, which collapsed last Friday by 4.2%.
Uncertainty remains on Wall Street, after an initial jump in index futures, which has faded over the hours. The Dow Jones falls over 100 (-0.32%) to 32,873 points, the S&P 500 loses 0.25%, to 4121 and the Nasdaq is stuck around 12,334. The US indices travel close to the lows of the year.
Hi tech is still under pressure, with Amazon, Tesla and Apple stocks also falling in today’s session.
“With inflation so high and earnings growth slowing rapidly, equities are no longer the inflation hedge many investors have counted on,” Michael Wilson, equity, wrote in a note to clients. Morgan Stanley strategist.
More than the 280 companies trading on the S&P 500 that have reported earnings so far, 80% beat analysts’ earnings expectations, while 73% outperformed the revenue outlook.
Maximum caution in view of the FOMC, the monetary arm of the Fed led by Jerome Powell, which will meet tomorrow to decide what to do on rates, then making the big announcement the day after tomorrow, Wednesday 4 May:
the consensus of analysts is for yet another rate hike, after that of March 16, in which the cost of money made in the USA was raised for the first time since 2018. The squeeze, by 1/4 of a percentage point, led rates at the new range between 0.25% and 0.50%.
However, the Fed’s hawkish work has only just begun: in the face of increasingly hot inflation, which has jumped by more than + 8% on an annual basis, Powell & Co have made it clear that they have no intention of staying with the hands in hand. The consensus agrees on a monetary tightening of 50 basis points.
In the meantime, Treasury rates return to exceed the 2.90% threshold, and jump to the new record of the last three years, over 2.96%, now one step away from the 3% threshold; on Wall Street the hope is that the central bank is not too abrupt in communicating the normalization of its monetary policy because, if the US stock market has left a nightmare month behind, it is also for the fear that a policy that is too restrictive to part of Jerome Powell & Co may end up crashing the fundamentals of the US economy against the wall of recession, in a process known as “hard landing”.
Among the positive stocks, Activision Blizzard (ATVI) is doing well, rising about 3% after Warren Buffett reported at the annual shareholders’ meeting that he had increased his stake in the video game maker. Berkshire currently holds 9.5% of Activision’s capital. In January, Microsoft announced plans to buy the group for $ 95 per share.