(New York) The New York Stock Exchange opened lower on Thursday, still under the influence of communication from the American central bank (Fed), which opened the door to a final tightening this year and wants to maintain its high rates for a long time.
Around 9:35 a.m. ET, the Dow Jones was down 0.56%, the NASDAQ was down 0.86% and the broader S
The Fed kept its key rate unchanged on Wednesday, in a range between 5.25% and 5.50%, but investors took more notice of the forecasts of the institution’s members.
The majority of the latter are counting on a final increase by the end of the year, and only anticipate two rate cuts in 2024, compared to four in June.
“The market is trying to determine whether the Fed will indeed raise rates again,” commented Quincy Krosby of LPL Financial.
The Fed’s offensive tone has wreaked havoc on the bond market. The yield on government bonds, the most representative of market expectations regarding monetary policy, rose to 5.19% on Thursday, the highest in 17 years.
As for its 10-year equivalent, it rose to 4.48%, a first since November 2007.
The mood in New York is also darkened by the weekly report on new unemployment claims, which came out well below economists’ forecasts.
For Patrick O’Hare of Briefing.com, this figure “shows that the labor market remains tight, which will encourage the Fed to remain offensive.”
Operators are also worried, according to Quincy Krosby, about the possible budgetary impasse in Congress, which could paralyze the functioning of the federal state if a solution is not found within ten days, with some Republican elected officials calling for additional cuts.
On the equity side, the technology sector remains the most targeted, as it is particularly sensitive to interest rates, which reduce its prospects for future profits.
Nvidia (-0.70%), Amazon (-2.96%), as well as semiconductor manufacturer Broadcom (-3.46%) were among the most affected.
Superstar of the rating since the start of the year, thanks to the fever of so-called generative artificial intelligence (AI), Nvidia has lost more than 16% since its peak at the end of August.
The specialist in enterprise communication networks Cisco (-3.05%) pays the announcement of the acquisition of the data analysis software publisher Splunk (20.95%) for 28 billion dollars.
Elsewhere on the stock market, the courier group FedEx was prancing (7.01%), supported by a quarterly net profit significantly higher than expectations, thanks in particular to the effects of a vast cost reduction plan, even if its turnover slightly disappointed.
The Memphis company raised its profit forecast range for its full 2024 fiscal year (June to May).
After the euphoria of the first day of trading, the weather is clouding over for Arm (-2.00%). Since the close of its first session on the New York market, Arm has fallen 18% and lost more than $11 billion in market valuation.
Other Wall Street newcomers Klaviyo (2.05%) and Instacart (4.15%) are faring better.
The entertainment giants are making progress while, according to CNBC, screenwriters and studios are close to an agreement that would end the strike that started nearly five months ago.
Disney ( 0.52%), Netflix ( 1.34%), Paramount Global ( 1.89%), and Warner Bros Discovery ( 0.83%) were all gaining ground.
