(ABM FN-Dow Jones) US stocks were lower Tuesday night, retreating from rising bond yields, which are pricing in more Fed rate hikes as inflation spirals out of control, with large losses for the stocks of major investment banks after rare disappointing data from Goldman Sachs.
The S&P500 index fell 1.6 percent to 4,587,087 points and the technology exchange Nasdaq lost 2.1 percent. The Dow Jones index lost 1.3 percent to 35,429 points.
Investors in New York came back from a long weekend on Tuesday. On Monday, the trading floor remained empty with the celebration of Martin Luther King Day, a federal holiday in the United States.
On Tuesday, interest rate fears dominate, with a US 10-year yield rising further and further, to more than 1.83 percent.
“Investors are bracing for four Federal Reserve rate hikes this year to curb inflation,” said broker FXTM analyst Lukman Otunuga.
“In October, the market expected only one rate hike this year and now it’s four,” said Brooks Macdonald’s Adward PArk.
Chinese President Xi Jinping spoke out against Fed rate hikes at the virtual World Economic Forum. “If major economies put on the brakes or make a U-turn in their monetary policies, there will be a serious negative spillover effect. That will pose challenges to global economic and financial stability, and emerging economies will feel the most pain from this.” said the Chinese leader.
While the Fed appears to be aggressively winding down its monetary easing policy in the coming months, the People’s Bank of China is still accommodative and cut two more key rates by 10 basis points on Monday.
“If it turns out to be another mixed week in terms of quarterly earnings, it could take some of the bulls’ confidence in the stock market, especially when you consider that the S&P 500 has already lost 2 percent so far this year,” Otunuga said.
On a macro-economic level, the Empire State index on the industry around New York appeared before the fair. The index fell below zero in January, reflecting pessimism among those surveyed.
Oil prices rose to their highest level in more than 7 years on Tuesday, amid geopolitical tensions in the Middle East where rebels in Yemen have carried out drone strikes on the United Arab Emirates. A barrel of West Texas Intermediate was more than one percent more expensive on Tuesday at more than $84.60. Brent cost 87 dollars and therefore about 0.9 percent more expensive, after a higher top.
OPEC’s monthly report did not include any changes to projected oil demand and again the cartel emphasized that the omikron variant of the coronavirus will have limited impact on demand.
The euro is quickly losing ground against the dollar again, trading at 1.1330.
Company news
Goldman Sachs opened the books on Tuesday afternoon and disappointed in profits. Total income was above expectations, but it was clear that the equity trading and asset management division, among others, had a difficult time in the fourth quarter. The stock fell 7 percent. Industry partner JP Morgan Chase lost 4 percent.
Bank of America, Morgan Stanley, Procter & Gamble and Netflix will follow in the coming days.
Coatings company Axalta issued a profit warning for the fourth quarter, with figures to be published at the end of January. Raw material prices weighed on the results and disruptions in the supply chain turned out to be worse than expected. Shares lost 2.3 percent Last week, another industry partner of AkzoNobel, Sherwin-Williams, also issued a warning.
Microsoft acquires the maker of computer games such as Call of Duty, Activision Blizzard, for almost $69 billion in total. Microsoft was 2 percent lower. Activision became 25 percent more expensive.
The US government is investigating whether the cloud activities of Chinese e-commerce giant Alibaba pose a risk to the national security of the United States, Reuters news agency reported Tuesday. The stock loses 1.4 percent.
Bron: ABM Financial News–
From Beursplein 5, the editors of ABM Financial News keep a close eye on developments on the stock exchanges, and the Amsterdam stock exchange in particular. The information in this column is not intended as professional investment advice or as a recommendation to make certain investments.
