(New York) The New York Stock Exchange ended sharply lower on Wednesday as bond yields rose to the highest since 2007 on concerns over the Middle East conflict, while earnings season has only just begun.
The Dow Jones index lost 0.98% to 33,665.08 points, the technology-dominated NASDAQ lost 1.62% to 13,314.30 points, the S
The yield on 10-year US government bonds hit a new 16-year high, touching 4.92% during the session.
In their wake, real estate rates also rose to a 23-year high of 8% for 30-year fixed-rate loans, the standard in the United States.
An ounce of gold, up 1.36% at $1,962.10, was at its highest in more than two months.
The oil market reacting to the threats of an oil embargo on Israel from Iran accelerated its price progression.
President Joe Biden, visiting Israel, exonerated the country after the deadly strike against a hospital in Gaza which sparked a wave of revolt in the Middle East. He obtained that Israel, attacked on October 7 by Palestinian Hamas, authorize the entry of humanitarian aid into the Gaza Strip.
“It is difficult to see clearly the decline in stocks, between the influence of events in the Middle East and that of the rise in interest rates”, a phenomenon which is eating into future corporate profits, said Karl Haeling from LBBW to AFP.
“There is certainly the fear” that the conflict between Israel and Hamas “will turn into a regional conflict,” added Tom Cahill of Ventura Wealth Management.
But he also thinks that, for the market, “the big problem is above all the rise in interest rates”, more aroused, according to him, by the recent good American macroeconomic figures which raise fears that the Fed will leave ” high rates last longer.”
The analyst refers in particular to retail sales which surprised investors with their strength in September (0.7%).
On the macroeconomic front, the central bank’s Beige Book described an economy slowing somewhat and a labor market softening, but the report covers a six-week period before October 6.
Among the results expected after the closing bell, Netflix caused a stir, announcing a 10% jump in subscribers while quarterly net profit came in better than expected.
The streaming platform gained 8.76 million subscribers, reaching more than 247 million at the end of September.
The action, which closed down 2.68%, soared almost 10% in electronic trading.
Tesla, on the other hand, surprised analysts negatively.
The electric vehicle manufacturer reported third-quarter results lower than forecasts for both profit and turnover, which stood at $23.35 billion (9%). The group led by Elon Musk has been weighed down by an increase in its production costs.
The title, which plunged 4.78% on Wednesday to $242.68, gained 0.50% in after-hours trading.
Procter
United Airlines experienced a downturn (-9.67%), despite better results than projected by the market. The company lowered its forecasts for the fourth quarter, due to the increase in the cost of kerosene but also the possible prolonged suspension of its flights to and from Tel Aviv.
The Toronto Stock Exchange lost more than 1% on Wednesday, victim of declines in the industrial, community services and base metals sectors, while the major American indices also retreated.
The composite index S
Markets continue to grapple with uncertainty surrounding interest rate hikes and resulting high bond yields, observed Michael Currie, senior investment advisor at TD Wealth.
US Treasury yields continued to put pressure on the market on Wednesday.
Interest rates and stocks have maintained an upward and downward tension for months that “is becoming almost monotonous,” said Mr. Currie. “Rates go down, stocks go up, rates go up, stocks go down. »
These moves affected most sectors and frustrated investors, he said.
U.S. Federal Reserve Chairman Jerome Powell is expected to speak on Thursday, Currie said, and he is expected to reiterate that the central bank considers it necessary to keep interest rates higher longer. for a long time, and a further increase is still not excluded.
“There is certainly no question of rate cuts in the United States,” Mr. Currie emphasized. At the very least, we stay where we are, and maybe we’ll go a little higher. »
This idea of “higher for longer” rates imposes a ceiling on stocks, he said.
It was a mixed day for U.S. earnings, as third-quarter financial results reports continued to come in. Shares of Morgan Stanley fell despite better-than-expected earnings, while those of Procter
Meanwhile, several U.S. airlines saw their shares fall, including United Airlines, which gave a bleak outlook for the fourth quarter amid rising jet fuel prices and the suspension of flights to Israel.
Oil prices have risen, an expected side effect of any conflict in the Middle East, Mr. Currie noted.
However, the TSX energy sector was more or less stable on Wednesday, despite the price of oil rising above US$87, or about 2%.
This speaks to the volatility in the markets, Currie said. “It really evolves day by day, contrary to a real trend. »
Both the Bank of Canada and the Fed are expected to hold rates steady at their upcoming meetings, but investors remain focused on interest rates, he said.
Many investors are turning to bonds amid volatility and rising yields, Mr. Currie added, and dividend stocks are particularly affected by this rotation.
“Many individual investors withdraw permanently thinking that the risk is not worth it. »
On the currency market, the Canadian dollar traded at an average rate of 73.07 US cents, up from 73.28 US cents on Tuesday.
On the New York Mercantile Exchange, crude oil rose 18 cents to US$85.44 a barrel, while natural gas rose 3 cents to US$3.08. per million BTUs.
The price of gold advanced by US$1.40 to US$1,935.70 per ounce and that of copper appreciated by less than 1 US cent to US$3.58 per pound.
