(New York) The New York Stock Exchange ended lower on Wednesday, hurt by rising bond yields and slow progress in US debt talks amid widespread caution.
The Dow Jones fell 0.77%, the NASDAQ index fell 0.61% and the broader S
Eight days before a possible default by the United States, negotiations between the White House and the Republican opposition continue to reach a raising of the debt ceiling, but without significant progress on Wednesday.
US President Joe Biden has said he is ready for a framework for public spending, which would reduce it by a trillion dollars over ten years compared to the trajectory initially planned.
His main interlocutor, Republican Speaker of the House of Representatives Kevin McCarthy, said he was optimistic about the outcome of the talks, but showed no sign of inflection.
“We all know what’s going to happen,” commented Maris Ogg of Tower Bridge Advisors, who said the US will avoid default. “The only question is whether there is an agreement or whether they push the deadline” by adopting a text that allows more time for discussions.
Even if the worst is avoided, “you are going to have a lot of debt issuance” in the weeks and months to come, to make up for those that have not been able to take place in recent months, she argues.
This influx of Treasuries is expected to unbalance supply versus demand, drive down the price of US government bonds and force the government to offer higher rates.
It is this anticipation that partly justifies the tensions experienced by the bond market. On Wednesday, the yield on 10-year US government bonds stood at 3.74%, against 3.69% the day before closing.
The other element of explanation is the minutes of the last meeting of the American central bank (Fed), published on Wednesday, which confirms that its members are in favor of keeping rates high in the medium term.
“Wall Street took two punches” that kept it in the red, where it had been since the opener, Edward Moya of Oanda concluded in a note.
This environment of high interest rates is, in fact, negative for the equity market, which until recently was hoping for a monetary turnaround and several falls by the end of the year.
A string of well-received releases from the retail sector did little to improve investor sentiment.
Department store chain Kohl’s (7.52%) was sought after posting results that beat expectations.
The group has improved its margins, as has the clothing chain Abercrombie
Elsewhere in the retail sector, supermarket chain Target dropped 2.76%. The group announced Wednesday the withdrawal from its shelves of products celebrating the LGBT community, a decision justified by threats made against some of its employees, underlining the climate of tension which reigns on the subject in the United States.
Regional bank PacWest, often targeted since the start of the banking crisis, fell 2.42% after several sessions in levitation. The establishment announced on Tuesday evening the sale of its subsidiary Civic Financial Services, dedicated to loans to real estate professionals, to Roc Capital Holdings.
NASDAQ
