The technology-linked index fell sharply on Thursday after the Fed’s decision to raise interest rates to fight inflation.
The New York Stock Exchange signed into its worst session since 2020 on Thursday, with investors taking the opposite view of the previous day’s rally after a second reading of the Fed’s announcements on Wednesday.
The Nasdaq recorded the third-largest point loss in its history, following the two black sessions on March 12 and 16, 2020, at the start of the coronavirus pandemic.
The technology-heavy index was down 4.99%, while the Dow Jones was down 3.12% and the broader S&P 500 index was down 3.56%.
“We had one of the best sessions yesterday and one of the worst sessions today,” noted Angelo Kourkafas of Edward Jones.
After buoying on Wednesday from comments by Fed Governor Jerome Powell, who ruled out an even sharper monetary policy tightening and a 0.75 percentage point hike at his next meeting, the market regained his senses on Thursday.
“The fact (that the US central bank) ruled out a 0.75 percentage point increase has not really changed the fact that the economy is slowing and the Fed is going to tighten monetary policy at a high pace,” said Angelo Kourkafas. .
“People started to think a little more about the Fed and its communication and realized that things weren’t going to get better,” said Maris Ogg of Tower Bridge Advisors.
For her, Thursday’s movement is also explained by the realization of profits, which followed the previous day’s jump, as well as by the rise in bond rates.
“That’s what scared the stock market,” she said.
The yield on 10-year US government bonds rose above 3.10% for the first time since November 2018.
technology in red
As usual, the first to be attacked by investors were tech and growth stocks, which now weigh more heavily on Wall Street.
Apple (-5.57%), Microsoft (-4.36%), Tesla (-8.33%) or Amazon (-7.56%) were hurt. The latter has dropped nearly 20% since its results were published a week ago and wiped out more than 280 billion in market valuation.
The New York market was also misunderstood by some mixed corporate results, accompanied by very measured and even pessimistic forecasts.
“Companies with the best numbers usually publish first” during earnings season, says Maris Ogg. “The bad ones come later,” which is now, she says.
Wall Street notably scored a number of publications from e-commerce sites considered lackluster, even worrisome.
Online sales site eBay suffered from lower-than-analyst forecasts for the second quarter (-11.72% to $48.04), despite turnover and profit above the Wall Street consensus.
The e-commerce platform Shopify also collapsed (-14.91% to $413.09) after publishing much lower-than-expected turnover as well as a significantly larger loss.
Twitter benefited (+2.65% to $50.36) from the communication of Elon Musk, who managed to raise seven billion dollars from investors to finance the acquisition of the platform.
This amount, collected from funds and wealthy investors such as businessman Larry Ellison or Saudi prince Al-Walid ben Talal, will allow the reduction of the amount lent to banks for the operation.
Snap (-9.58%), Meta (parent company of Instagram, -6.77%) or Alphabet (parent company of YouTube, -4.76%) suffered after their fiercest competitor, TikTok, revealed on Wednesday. fair that was going to create an ad revenue sharing system with the most popular creators on the platform.
“The market will remain volatile and fluctuating until we have confirmation that inflationary pressures ease and bond rates with them,” said Angelo Kourkafas.
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