Equities New York Close: Recent rally without continuation for the time being | 08/11/22

NEW YORK (awp international) – After the strong previous day, the desire to buy on the US stock market did not last long on Thursday. The technology-heavy and interest-sensitive Nasdaq 100, which had increased particularly significantly in the middle of the week, benefiting from decreasing inflationary pressure, this time lost 0.65 percent to 13,291.99 points. The leading index Dow Jones Industrial closed just 0.08 percent up at 33,336.67 points. The market-wide S&P 500 recorded a minus of 0.07 percent to 4207.27 points.

Thanks to the most recent rally on the stock market, all three indices had recently reached the price levels of early May. The Nasdaq 100 alone has already recovered by a good 20 percent since its June low. The market is now saying that the rally may have gone a little too far.

On Thursday, the recently somewhat lower inflationary pressure in the United States supported prices only initially. Economic data on this trading day showed that inflation at the manufacturer level also weakened more than expected in July.

The latest inflation data has sent an encouraging signal towards his soft landing scenario for the US economy, wrote UBS Wealth Management investment strategist Mark Haefele. However, investors should continue to act cautiously, he advised. It is still not entirely clear in which direction the economy will develop and what the position of the US Federal Reserve Bank will be then. The time for clear positioning on the market has not yet come.

Fed officials also said, in response to the previous day’s consumer price data, that this does nothing to change the fact that the central bank is aiming for higher interest rates this year and next. The Fed last took action against high inflation at the end of July by raising interest rates by 0.75 percentage points. Inflation remains “unacceptably high,” said Chicago Federal Reserve Bank Chairman Charles Evans.

Among the individual values, Walt Disney shares expanded their previous day’s gain. The entertainment giant has now caught up with long-time market leader Netflix with its streaming offerings. The money for the entertainment empire meanwhile earned in the third business quarter the classic business with the TV cable division as well as film studios, theme parks, holiday resorts and cruise ships. Overall, Disney’s adjusted earnings per share beat market expectations. Disney stocks were once again at the top of the Dow, gaining another 4.7 percent. Netflix’s shares fell 0.6 percent.

Investors in speaker provider Sonos had to deal with a price drop of around a quarter. The group sees such a bad environment for its business that it is postponing the launch of a new product. Sonos has seen a slowdown in demand in its businesses since June, CEO Patrick Spence said in a conference call with analysts. He attributed it in part to the fact that consumers are currently spending their money on services and travel rather than goods.

The online dating platform Bumble failed to meet market expectations with its sales forecast for the third fiscal quarter. The papers fell by 8.6 percent.

Health stocks lagged behind overall. Johnson & Johnson lost 2.1 percent at the end of the Dow. Pfizer fell 3.3 percent in the S&P 500. Market participants also linked Pfizer’s losses to ongoing product liability lawsuits over the recalled drug Zantac. These had already hit the shares of Sanofi and GlaxoSmithKline (GSK) heavily in European trading.

According to JPMorgan analyst Chris Schott, the consequences for Pfizer should be manageable. Zantac was once a popular drug used to suppress stomach acid production for heartburn. In the US, plaintiffs have been claiming for some time that the drug allegedly caused them cancer. Schott pointed out that over the past 25 years, several companies, including Boehringer, Sanofi and Pfizer, have held the rights in the US to sell OTC the drug that GSK launched in the early 1980s.

The euro stayed above $1.03 in US trading. After the New York stock exchange closed, the common currency was trading at $1.0324. In European morning trading, the euro had fallen below $1.03, but then rose to $1.0364. The European Central Bank (ECB) had set the reference rate at 1.0338 (Wednesday: 1.0252) dollars, the dollar thus cost 0.9673 (0.9754) euros.

US Treasuries gave up early trading gains and posted losses. The futures contract for ten-year Treasuries (T-Note Future) recently fell by 0.59 percent to 119.05 points. The yield on ten-year government bonds was 2.89 percent./ajx/he

— By Achim Jüngling, dpa-AFX —

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