The New York Stock Exchange opened sharply lower, concerned about speculative turmoil around a few stocks and awaiting the outcome of a Fed meeting as well as the results of big names in tech.
At 15:00 GMT, the Dow Jones was down -1.36%. The high-tech Nasdaq was down -1.04% and the expanded S&P 500 index was down -1.29%.
The day before, in a chilling session, the Dow Jones index fell 0.07% to 30,937.04 points, as was the Nasdaq at 13,626.06 points. The S&P 500 downgraded to 3,849.62 points (-0.15%).
“US stocks were trading lower early in the session pending the Federal Reserve’s monetary policy decision.” at 7:00 p.m. GMT and the first press conference of the year by its president, Jerome Powell, analysts at Schwab noted.
Some investors were also concerned about the frenzy around actions such as that of video game distributor GameStop (+ 100% at the opening) or that of AMC Entertainment Holdings (+ 215%).
GameStop, a channel rather in difficulty, has been the subject for five days of a battle between hedge funds that had bet on the fall of the title and stock marketers who defend it.
“For professionals, there is a problem right now: this is what is happening with stocks like GameStop and AMC”, said Gregori Volokhine of Meeschaert Financial Services.
This rise in securities “pushes hedge funds” who had bet on their decline, “to have to liquidate positions and raise funds” to cover their bets, added the expert.
Hedge funds sell
“To cover their ‘short’ positions, they sell their ‘long’ positions”, he summed up. The analyst pointed to stocks in the technology or renewable energy sector that were suffering from these unexpected fundraising.
The Microsoft title, “after the extraordinary results of the day before, should have continued to fly,” he explained.
The action of the computer giant, the second largest capitalization of the S&P 500, stagnated Wednesday after having announced a quarterly profit up 33% which should have delighted the market.
Investors are awaiting results from Apple, Facebook and Tesla at the close, all in the red at the opening.
For Patrick O’Hare, “the morning’s bout of weakness was also part of the expectations of the meeting of the Central Bank’s Monetary Committee.” Its press release “will strengthen this ultra-accommodative monetary policy stance”, he noted.
“Fed boss Jerome Powell is expected to suggest again that the central bank will not raise rates anytime soon”, he added.
On the macroeconomic front, the International Monetary Fund (IMF) has also issued an alarm signal once again, during its global economic forecasts, on a possible “risk of a market correction”.
Boeing dropped more than 4% after painful results with the pandemic, posting a loss of $ 11.9 billion in 2020.
The Walgreens drugstore network (+ 5%) celebrated the arrival at its head of a defector from Starbucks, Roz (Rosalind) Brewer, who becomes the only black woman at the head of a company in the “Fortune 500” ranking.
In the bond market, the 10-year yield on Treasuries gave ground to 1.0093% from 1.0347% on Tuesday.
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