NEW YORKWall Street opened in the red on Friday, the closing day of its worst week since March, as interest rate pressures paused.
The Dow Jones was down 0.57%, the technology-dominant Nasdaq was down 0.93% and the broad S&P index was down 0.69% in early trading.
Wall Street it ended negative again on Thursday for the third session in a row, against a backdrop of continued rise in US Treasury yields.
The Dow Jones index lost 0.84% to 34,474.83 points, the Nasdaq technology index lost 1.17% to 13,316.83 units, and the S&P 500 0.78% to 4,370.36.
The recent rise in 10-year and 30-year Treasury bond rates reached the highest since 2007 on Thursday, at 4.30% and 4.40%, levels that it already reached in October 2022 when inflation was rampant in the United States.
“I didn’t expect 10-year rates to go up to 4.30%. That’s what drives down” stocks, said Jack Ablin of Cresset Capital. “The current level of mandatory rates suggests a PE of 17, but the median ratio for S&P 500 companies is currently 21,” well above the forecast indicating a drop in this key ratio for the market.
The big names in technology also weakened, starting with Apple (-1.46%) and continuing with Amazon (-0.81%), Meta (-3.13%) or Netflix (-3%).
“Stocks will be under pressure until this yield increase is reversed,” the Cresset Capital analyst added.
“The most important factor (to explain the rate hike) is that the economy is stronger than expected,” Karl Haeling, director for capital markets at Landesbank Baden-Wurttemberg (LBBW) told AFP.
“At the beginning of the year, the consensus among economists was that we were heading towards zero growth and a small recession,” he recalled.
“But, the Atlanta Fed’s GDP indicator, revised upward several times, points to 5.8% expansion in the third quarter on an annual basis (ndlr: the 12-month projection if conditions hold at the time of measurement). The economy is strong!”, said the analyst.
For Nathan Sheets, chief economist at Citigroup, the essential reason for the rate hike is that the Fed “may have to do more” to contain inflation after 11 increases in these benchmark interest rates for the economy.
“Now we have to wait and see what Jerome Powell, the chairman of the Federal Reserve, says in Jackson Hole next week, and whether he sets the stage for another rate hike between now and the end of the year,” Convera’s Joe Manimbo said. Financial Services.
Among the day’s values, CVS pharmacies fell 8.14% after a large insurer, Blue Shield, in California, broke up its drug supply partnership and turned to Amazon for supplies.
Meanwhile Walmart, which is part of the Dow Jones, fell 2.24% to $155.69 despite good results.
Meanwhile, VinFast, a Vietnamese maker of electric vehicles, which rose 68% the day it went public on Tuesday, fell below its entry level on Wall Street, at $20 (-33.58%).
FOUNTAIN: With information from AFP
