(New York) Wall Street, which had initially welcomed a slowdown in US inflation, finally ended in the red on Wednesday as the minutes of the last meeting of the Fed put on the table the possibility of a slight recession in the United States.
The Dow Jones index fell 0.11% to 33,646.50 points, the tech-heavy NASDAQ lost 0.85% to 11,929.34 points and the S
The New York Stock Exchange spent half of the session in the green, welcoming, however cautiously, inflation slowed to 5% year on year in March, better than expected, according to the CPI index, against 6% in February on twelve months.
However, investor enthusiasm was tempered by the fact that so-called core inflation – which excludes volatile sectors like food or energy – remained high year on year at 5.6%, down from 5. 5% the month before.
While energy prices fell, allowing general inflation to subside, housing and transport prices continued to rise.
“There are encouraging signs […] but with underlying inflation still high, there is a good chance that the Fed will continue its tightening with another final rate hike of 25 basis points in its next monetary meeting,” scheduled for May 2-3, commented Paul Ashworth, economist for Capital Economics.
In the second half of the session, the minutes (“minutes”) of the last monetary meeting of the Fed in March raised questions, exposing a difference of opinion between the economists of the institution and its Monetary Committee.
The team of economists estimated that the recent banking difficulties could lead to “a mild recession in the United States”.
Despite this advice, and that of non-voting members inclined to take a break from rate hikes, the Federal Reserve Monetary Committee (FOMC) had voted, unanimously, for another 25 percentage point rate hike.
“There will be divisiveness” within the FOMC at the next meeting in early May, warned Ryan Sweet, Oxfordeconomics’ chief U.S. economist.
” What a day ! We learned so much! “, commented for AFP Edward Moya, analyst for Oanda.
“Investors have been reading and re-reading these minutes amid concerns that Fed officials are becoming more nervous about the economic outlook and the consequences of the banking problems,” he said.
The analyst recalled that as of Friday several large banks will disclose their results: “they will have to reveal their balance sheets and if they hesitate to do so, it means that there are problems”, he warned.
Added to this was the fact that core inflation remained tenacious in March, which will “lead the Fed to soon signal that it will have to keep rates high for longer than the market expects. Mr. Moya further explained.
“All of this has reduced risk appetite among investors,” he concluded.
On the stock side, the huge container carrier Triton International jumped more than 32% after signing an agreement for its takeover by Brookfield Infrastructure, which should delist it. The acquisition is valued at $13.3 billion, including debt.
E-commerce platform Shopify gained 1.16% after a favorable analyst rating but several big names in the tech sector lost ground such as Block (electronic payments, -5.54%), the communication specialist Zoom video (-3.59%) or the Roku streaming group (-5.47%).
Airlines have stalled as their earnings forecasts have been revised downwards. Thus American Airlines dropped 9.22%, United 6.50% and Delta 2.43%.