The New York Stock Exchange ended a seesaw session on Wednesday, still jittery over inflation and recession risks as the worst stock market semester since the 1970s ended Thursday.
The Dow Jones index climbed 0.27% to 31,029.31 points. The Nasdaq, with strong technological coloring, lost 0.03% to 11,177.89 points and the S&P 500, 0.07% to 3,818.83 points, according to final results.
“Investors struggled to find conviction after yesterday’s plunge,” commented analysts at Schwab.
Same story at 50 Park Investment where Adam Sarhan pointed out that the market “was struggling to find direction and above all good news”.
“Investors face two headwinds: the Federal Reserve, which is more aggressive, and the market trend, which is down,” added Mr. Sarhan, hoping for quarterly results from companies, to come mid- July, that they “will bring good news”.
“If this is not the case, we must prepare for other declines” in the indices, he said, as Wall Street will close Thursday one of its worst semesters since the mid-1970s.
So far the index of star stocks is down 14.61% since the beginning of the year. The Nasdaq plunged 28.55% while the S&P 500, the most representative of the American market, fell 20.04%.
– Accentuated contraction –
A new and latest estimate of the US gross domestic product (GDP) in the first quarter showed on Wednesday that the world’s largest economy contracted more than expected, at -1.6% at an annualized rate.
It was the decline in consumer spending, which was stronger than expected, which deepened the decline in GDP by 0.1 point compared to the second estimate.
“Fears of slowing growth and persistent inflation continue to plague the market,” Wells Fargo analysts summed up.
Investors were expecting crucial indicators on Thursday, which also explained the wait-and-see attitude of the session.
The US Department of Commerce is due to release consumer spending for May, a vital item for the US economy, and especially the PCE consumer price index, the Fed’s favorite barometer for measuring inflation.
Investors took note of new comments from major central bankers at a conference hosted by the ECB in Portugal.
Jerome Powell, the head of the US central bank, reiterated the Fed’s “intense commitment to bringing inflation down to around 2%”, as it peaks at 8.6% in pace annual, according to the CPI index.
“The path” that would make it possible to decelerate inflation without unduly affecting the job market “has narrowed”, he acknowledged, but “we think we can do it”, even if there is “no guarantee”.
But “the worst stupidity would be to fail to restore price stability”, he hammered.
For her part, the chair of the Fed’s office in Cleveland and voting member of the Monetary Committee (FOMC), Loretta Mester, affirmed that she would support a further 75 basis point hike in the rates on the federal funds if the economic conditions remain the same. The next monetary meeting of the Fed is for the end of July.
On the bond market, rates on 10-year US Treasury bills, which move in the opposite direction to the price of the bond, tumbled to 3.09%.
Listed homeware chain Bed Bath and Beyond, which suffered a bigger-than-expected quarterly loss coupled with a drop in sales and the resignation of its CEO, plunged 23.58%, under $5.
“We are starting to see that the economic malaise affects + Main Street + (that is to say the real economy) and not just Wall Street”, noted Adam Sarhan.
The action of the cruise line Carnival sank 14.18% to 8.86 dollars, after an unfavorable opinion from Morgan Stanley. The title was displayed at 26 dollars a year ago.
Its fall brought in its wake its competitors Royal Caribbean (-10.26%) or Norwegian Cruise (-9.33%).