Wall Street reduces losses suffered in the premarket, in the wake of an article in the Wall Street Journal, according to which several members of the Fed are worried about the continuous round of monetary tightening launched by the US central bank, in the fight against inflation.
According to the WSJ, the exponents are considering the risk of going too far in the path of rate hikes.
The rumors are released a few days after the meeting of the FOMC, the monetary policy arm of Jerome Powell’s Fed, scheduled for November 1 and 2.
The consensus predicts the fourth consecutive rate hike of 75 basis points, aimed at curbing US inflation, with respect to the current range, between 3% and 3.25%.
Yesterday second consecutive negative session for the US stock market: the Dow Jones Industrial Average lost 90.22 points (-0.30%), at 30,333.59; the S&P 500 marked a decline of 0.8% to 3,665.78. The Nasdaq Composite lost 0.61% to 10,614.84.
However, Wall Street is preparing to end the week in the name of gains: from Monday’s session until yesterday’s close, the Dow Jones gained 2.36%, the S&P 500 took 2.31% and the Nasdaq Composite reported a 2.84% progress.
At 3.37pm, the Dow Jones is practically flat as is the S&P 500; the Nasdaq also significantly reduced the losses suffered in the premarket, losing 0.28%.
Anxiety about the direction of interest rates continues to haunt market participants, also due to the flare-up in US Treasury yields. Yesterday those at 10 years flew over the 4.2% threshold, taking a jump of more than 20 basis points in two sessions. The bullish march did not stop there.
Yields on 10-year Treasuries continued to move higher today, breaking even the 4.3% threshold, up to 4.316%, a new record since 2008. Yields on two-year Treasuries are also up years, jumped to 4.639%, the highest since 2007.
Fed funds futures maturing in May 2023 have shot above the 5% threshold for the first time in the last few hours, confirming how traders expect the central bank to raise rates to that level before stopping in its fight against inflation.
But the Wall Street Journal indiscretions bring back the hope, on the markets, of a Fed perhaps less aggressive than it is feared.
The US quarterly season is also the protagonist.
Snap, the SnapChat messaging APP company, has returned to scare investors, with a quarterly rejected by the market.
During the third quarter of the year, Snap’s eps reached a higher than expected value of
0.08 dollars, against revenues that have been confirmed instead disappointing.
The group has announced its decision not to provide guidance for the fourth quarter, the second consecutive time in which it has chosen not to offer forward guidance to the market.
The stock is thus penalized by the strong sell-offs, and marks a drop of over -26%, with a contagion effect on US Big Tech stocks, such as Meta (-3.5%) and Alphabet (-1.45%).
Focus also on Twitter, with the stock that collapsed in the premarket by 16%, after some rumors indicated the possibility of a control over the activities of Elon Musk, CEO of Tesla who, after a turnaround, returned to focus on the group with a $ 44 billion acquisition by the National Security Bureau of Joe Biden’s administration.
In the sights, both the acquisition of Twitter and the Starlink satellite network. At the same time, the Washington Post reported that Musk plans to lay off up to 75 percent of Twitter’s workforce. The Twitter stock slipped by more than 5%, while Tesla fell by about 0.85%.