Wall Street falls sharply
The Dow Jones index slid 1.91% to 33,063.61 points, the Nasdaq index, 2.55% to 12,381.57 points, and the broader S&P 500 index, 2.14% to 4,137.99 points.
According to market specialist Andy Kapyrin of Regent Atlantic, the New York stock market has taken profits after a summer of fire and “before a week that should be pretty risky for stocks and bonds.
Without relief on this Monday, August 22, on this plan, the week will be marked by some important macroeconomic indicators, including the PMI activity indexes for Tuesday, August 23, but also the price index PCE Friday, August 19.
But the major event is the speech of Fed Chairman Jerome Powell at the annual meeting of central bankers in Jackson Hole, Wyoming.
“This is an opportunity for the Fed to send a clear message to the markets that the institution “is still focused on inflation rather than economic risks,” says Andy Kapyrin.
Traders now favour a 0.75 percentage point increase in the Fed’s main interest rate at the next meeting of the Fed’s Monetary Policy Committee on September 21-22, after having long expected only a half point.
This anticipated continuation of a forced tightening, never seen in the modern era, which would bring the key rate of the U.S. central bank to its highest level in 14 years, plunged technology stocks on Monday, August 22.
Amazon (-3.62%), Tesla (-2.28%), Meta (-2.92%) and Alphabet (-2.58%) illustrated the plunge. Technology companies often need to lend to fuel their growth and are generally struggling with tighter credit conditions.
“I expect them to be left behind as long as interest rates are relatively high,” says Andy Kapyrin.
But the current cold snap is not limited to the technology sector, and all members of the Dow Jones ended in the red on Monday, August 22.
Only a few defensive stocks, less sensitive to the economic situation, such as the health insurer UnitedHealth (-0.68% at 544.57 USD), the Dow’s largest weighting, have survived a little.
“Nothing has changed on the macro front” from where we were in June when Wall Street hit its lows for the year, argued Ross Mayfield of Baird. “I think we’re still headed in the right direction” on the equity side, “but from there, to justify the momentum we’ve seen, it may have been a little premature.”
On the stock market, the movie theater chain AMC (-41.95% to USD 10.46) suffered from the allocation of new shares to its existing shareholders as a dividend, as well as from the announcement of its competitor Cineworld, which is considering filing for bankruptcy.
The stock also suffered from the correction of the “same stocks,” of which it is a part, these shares carried to the nudes, since the beginning of 2021, by the smallholders, often without link with the financial health or the prospects of the companies.
Ford fell sharply (-5.04% to 15.08 dollars), after being sentenced on Friday, August 19, by a court in Georgia to pay 1.7 billion USD in damages. The jury found that a manufacturing defect in one of its pickups had played a role in the deaths of two motorists in 2014.
The automaker also announced on Monday, August 22, that it would cut 3,000 jobs, mainly in the United States, India and Canada.