Wall Street down, with hi-tech stocks continuing to underperform the market after yesterday’s loss of Nasdaq -2.47%, at the strongest pace since September.
A few minutes after the start of the trading day, the Dow Jones lost more than 230 points (-0.64%), to 35,667 points, while the S&P 500 fell 0.65% to 4,640 points. The Nasdaq lost 0.64% to 15,088 points.
This is Wall Street’s performance on a weekly basis: the Nasdaq Composite lost 2.9% on a weekly basis, the S&P 500 lost 0.9% and the Dow Jones weakened by 0.2%.
“With the Federal Reserve becoming more hawkish and expectations of higher interest rates, investors are reducing their exposure to growth stocks,” Jim Paulsen, chief investment strategist at The Leuthold Group, told CNBC. growth stocks exhibit a longer duration than value stocks, as more of their cash flows will be received in a more distant future. ”
However, US Treasury rates reflect more fear of the spread of the Omicron variant than of inflation. Ten-year rates fell to 1.395%, again breaking through the 1.4% threshold.
No relevant US macro data is expected for today.
Traders are still trying to digest the roundup of monetary policy announcements from several central banks yesterday and the tightening of Jerome Powell’s Fed tapering announced two days ago.
Jerome Powell’s Fed announced yesterday a strong acceleration of tapering, the program to reduce asset purchases that the central bank carries out every month. As of January 2022, asset purchases will increase to $ 60 billion worth of bonds (compared to $ 120 billion per month purchased under the original Quantitative easing plan launched in 2020 to counter the effects of the Covid pandemic).
The FOMC’s dot plot revealed that Fed officials expect three rate hikes next year, compared to a single tightening that was previously expected next year. The Fed left fed funds rates unchanged in the range between zero and 0.25%.
Focus on the Bank of England, which yesterday announced that it had raised rates for the first time since the start of the Covid-19 pandemic, despite intensifying fears about the spread of the Omicron variant. The BoE’s Monetary Policy Commission (MPC) voted to raise rates from an all-time low of 0.1% to 0.25%, indicating that it believes that the upward pressures on inflation outweigh the risks to the economy stemming from the new variant.
On the other hand, the official figure for UK inflation measured by the consumer price index indicated a jump, in November, of 5.1%, in the wake of the boom in energy prices and the bottlenecks affecting the economy. . The Bank of England inflation target is 2%.
A few days earlier, a warning against the risk of a stalemate on rates by the Bank of England had come from the International Monetary Fund.
For its part, the ECB has decided to confirm the reduction in asset purchases that take place with the pandemic QE PEPP, a bazooka that will end in March 2022. Christine Lagarde & Co, however, announced at the same time the strengthening of the traditional program of Quantitative easing, the so-called APP.
And in the statement it is clearly written that “net purchases of the PEPP could also be resumed, if necessary, to counteract the negative shocks associated with the pandemic”. The APP plan will continue at the pace of asset purchases worth € 20 billion, before strengthening to € 40 billion in the second quarter of 2022 and shrinking to € 30 billion in the third quarter.
In the second quarter, purchases will return at the rate of 20 billion euros per month.
Today it was the turn of the Bank of Japan led by Haruhiko Kuroda, which announced that it had confirmed the target for short-term interest rates at -0.1%, and the target for 10-year government bond rates around zero.
However, the institution also announced the launch of the tapering of its purchases of corporate bonds and commercial paper, thus deciding to reduce the support measures launched with the explosion of the Covid-19 pandemic.
In the spotlight the tensions between China and the United States, after the decision of the Biden administration to include in the black list of sanctioned companies more than 30 Chinese companies, accused of violating human rights and developing technologies that aim to control minds -brain control weaponry and that pose a threat to the national security of the United States.
Headlines include a focus on Rivian, in free fall on Wall Street, after the electric vehicle startup that made its Nasdaq debut this year reported third-quarter results, while announcing that it had cut its outlook. on car production.
The stock, which lost up to -10% in afterhours trading, lost more than 5% at the start of the session. Rivian said it expects it will fail to hit its 2021 production target of 1,200 vehicles of “a few hundred vehicles”, both due to problems affecting its supply chain and the challenges it has encountered. in producing the batteries necessary for the operation of its vehicles.
Buy boom on FedEx, which welcomes the release of the quarterly report: prices soar by more than + 7% after the shipping giant’s profits and turnover beat expectations and the company announced a $ 5 billion buyback plan .