Nothing to do for Wall Street, which continues to lose ground, with the Nasdaq and the S&P 500 retreating for the fourth consecutive session.
The US stock market is still suffering from fears of a further outbreak of inflation and, consequently, of a more aggressive Fed. At 4 pm Italian time, the Dow Jones lost more than 1% (almost -400 points), at around 35,840 points; the S&P 500 drops 1.64% to 4,600; the Nasdaq marks a decline of more than 2%, to 14,590 points.
On Sunday, analysts at Goldman Sachs wrote that they predict that the Federal Reserve will raise rates on fed funds four times this year, thus confirming itself more aggressive than what emerged from the December dot plot, which had indicated three squeezes for 2022.
The stocks of mega-cap companies active in the hi-tech sector, such as Meta (formerly Facebook), Amazon and Alphabet, are under pressure, falling between 2% and 3%.
Tesla is also down, failing to benefit from another note from Goldman Sachs: the one with which analyst Mark Delaney named the stock among the Top Pick of 2022, revising the target on the share price upwards, to 1,200 dollars. The stock of the EV giant founded by Elon Musk falls by more than 3%.
Good on the Nasdaq Zynga, which spiked up to + 50% after rival Take Two, a video game producer group, announced its purchase, for an amount of $ 12.7 billion. Take-Two said it will buy Zynga for $ 9.86 per share, at a 64% premium from the level at which the Zynga stock closed on Friday.
Take-Two said Zynga shareholders will receive $ 3.50 in cash and $ 6.36 in Take-Two stock for each Zynga share held. Take-Two stock loses more than 12%.
This week the US corporate earnings season will officially begin: US banks JP Morgan Chase, Citigroup and Wells Fargo will announce their quarterly reports on Friday, January 14th.
According to FactSet, the earnings of companies listed on the S&P 500 should have reported growth of 21.7% in the fourth quarter – if this forecast materializes, it would be the fourth consecutive quarter of growth at a rate of more than 20%.
JP Morgan and Citi mark a slight decline, while Wells Fargo is solid, with a gain of over + 1%.
Focus on US 10-year Treasury rates, which have even risen to fly above the 1.80% threshold for the first time since January 2020, thus returning to the levels prior to the Covid-19 pandemic. After 4 pm Italian time, ten-year rates travel to 1.805%.
It doesn’t take long to return to the 1.95% -1.97% levels tested in November and December 2019: analysts recommend paying attention to the psychological level represented by the 2% threshold.
The jump in rates was triggered both by the more hawkish tones of the Fed, which emerged with the publication of the minutes relating to the last meeting of 2021, and by the publication of the US employment report, which showed that average hourly wages – an important thermometer of the inflation trend – jumped in December, on an annual basis, by 4.7%, to the record of the last decades and over the + 4.2% estimated by the consensus. On a monthly basis, growth was + 0.6%, over the expected + 0.4%.
The interest rate trend will also be conditioned this week by some crucial market movers: tomorrow 11 January, the focus will be on the words uttered by the number one of the Federal Reserve Jerome Powell, in the hearing of the banking commission of the US Senate, in view of his reconfirmation as number one of the central bank.
Wednesday, January 12, all eyes will be on US inflation as measured by the consumer price index, which economists expect on average to have jumped 7.1% year-on-year, according to Dow Jones expectations. Also on Wednesday, the Beige Book will be published by the Fed.
The next day, Thursday 13 January, the US producer price index will be announced, another parameter for monitoring the trend of inflation, which will consequently affect the performance of yields.