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MARKET REVIEW. The New York Stock Exchange fell heavily on Thursday in a market increasingly worried about the pace of the 10-year US Treasury bill rate, which hit a one-year high.
The Toronto Stock Exchange also finished largely in the red, weighed down by the health and natural resources sectors.
The clues
260 Toronto, S&P/TSX lost 199 points, or 1.41%, to 18,223 points.
In New York, the S&P 500 yielded 96 points, or 2.45%, to 3,829 points.
The Dow Jones decreased 559 points, or 1.75%, to 31,402 points.
The Nasdaq fell 478 points, or 3.52%, to 13,119 points.
The Canadian dollar dropped 0.71%, to US $ 0.793.
The oil gleaned US $ 0.11, or 0.17%, to US $ 63.33.
L’or fell US $ 27.10, or 21.51%, to US $ 1,770.80.
The context
“The rapid upward movement in bond yields seems to be troubling investors while putting pressure on growth-oriented sectors, particularly that of information technology,” said experts at Charles Schwab.
The 10-year rate on US government bonds hit a peak of 1.61% on Thursday, a level not seen since February 2020. It then fell back a little, but was still moving around 1.50% in end of the day.
The 30-year rate also rose to 2.28%.
Bond yields move in the opposite direction to prices. A rise in rates is therefore synonymous with a significant movement in the sale of Treasury bills.
Investors generally part with their bonds when they anticipate a hike in Federal Reserve (Fed) key rates.
If the boss of the Fed, Jerome Powell, repeated this week that he did not intend to touch the current level of the rent of money, included in a range between 0% and 0.25%, many market participants believe that the manager may be forced to change his approach if the economy overheats.
A rapid rise in prices, caused by a strong upturn in growth, could indeed push the US central bank to raise its key rates in order to curb inflation.
Directly affected by a rise in borrowing rates, which could slow their growth and their ability to invest, the American tech pillars suffered on Wall Street on Thursday: Apple, Amazon, Alphabet and Facebook all fell by more than 3%.
Among the other values of the day, GameStop rose 19% after already seeing its price more than doubling the day before.
The progression of the video game retailer subsided at the end of the session, but the group still benefited from a surge in speculative purchases, which recalls the movements observed at the end of January on Wall Street.
Twitter rose 3.71% after having posted its objective of doubling its revenues by the end of 2023 and counting at that date 315 million daily active users known as “monetizable”.
Pfizer gained 1.99% after a massive study in Israel showing the company’s vaccine was 94% effective against symptomatic cases of COVID-19.
Modern gained 2.48% after significantly exceeding expectations for its quarterly revenue and forecasting revenue of more than $ 18 billion this year from the sale of its COVID-19 vaccine.
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