US MARKETS / Mixed – Investors sell off “growth stocks”
NEW YORK (Dow Jones) – The positive reaction on Wall Street to the accelerated tightening of US monetary policy has not lasted. Investors took advantage of the previous day’s recovery to take profits. Growth stocks from the technology sector were particularly affected. Because of its high level of borrowed capital, the industry is considered to be particularly sensitive to interest rates and thus a loser from a tighter monetary policy. On the other hand, economic cyclicals and so-called value stocks were sought.
The Dow Jones index was down 0.1 percent, but the S&P 500 and Nasdaq Composite lost 0.9 and 2.5 percent, respectively. 1,642 (Wednesday: 2,203) price winners were seen, compared to 1,722 (1,151) losers. 109 (161) titles went unchanged from the market. Bank stocks as beneficiaries of higher interest rates topped the list of winners, with the sector gaining 1.6 percent. On the other hand, technology stocks lost more than 3 percent on average.
Market observers offered various explanations for the price losses on Thursday. One was that investors should have processed not only the Fed decision, but also the decisions of other central banks. The Bank of England has surprisingly increased interest rates, while the ECB announced that it would cut back its bond purchases, but ECB boss Christine Lagarde described interest rate hikes in the coming year as “very unlikely”. Louis Navellier, founder of Navellier & Associates, spoke of uncertainty due to inflation on the one hand and monetary policy support from the central banks on the other.
Mike Kramer of Mott Capital Management, however, attributed the recovery in prices on Wednesday only to the decline in volatility. The volatility index VIX, also known as the “fear barometer”, has fallen.
Nonetheless, traders praised the Fed’s focus on fighting inflation. Because sustained high inflation will sooner or later slow down the economy and thus also burden the stock market, it said. “There’s a Goldilocks interpretation,” says investment strategist Edward Park of Brooks Macdonald. The Fed’s decisions dampened inflation without pushing interest rates to levels that would stifle the economic recovery.
Meanwhile, economic data received hardly any attention. Exceptionally positive real estate data, with traders referring to a “booming” market, as opposed to moderate weekly labor market data and a weak Philly Fed index. Industrial production rose broadly in line with expectations. The Markit purchasing managers’ indices for services and industry missed Expectations.
The dollar fell according to the statements of the US Federal Reserve from the previous evening, although according to analysts these were extremely hawkish. But all of this had already been priced in. Obviously, the dollar exchange rates before the Fed’s decision would not have included a risk premium for the Fed to be more cautious. The dollar is unlikely to gain until the Fed appears even more hawkish, it said in the trade. The dollar index fell 0.5 percent.
The euro held up surprisingly well with the rather deaf statements by ECB President Christine Lagarde. The common currency rose to its highest level in a week. While some market participants referred to the overall weakness of the dollar, the analysts of the SEB pointed to the regular securities purchase program APP of the European Central Bank (ECB). This is to be expanded with the expiry of the PEPP net purchases at the end of March 2022 – but less clearly than the SEB thought.
The British pound rose to a three-week high following the rate hike by the Bank of England, and the Turkish lira fell to an all-time low following another rate cut by the local central bank.
Government bonds recorded brisk influx, which was reflected in falling yields. On the one hand, dealers referred to the spreading omicron variant of the coronavirus. In addition, doubts were growing among investors that the Fed could really get inflation under control.
The dollar weakness and the deaf ECB meanwhile supported the gold price. Crude oil also rose sharply. A stalling of the economy and oil demand is not to be expected with the Fed decisions, it said.
Netflix in the price war with competitors
Netflix lost 2.3 percent. The streaming service provider is lowering its prices on the important Indian market, driven by its competitors Amazon and Disney. Lennar fell by 4.1 percent, the construction company specializing in private homes posted business figures below market expectations and also disappointed with the outlook. The software provider Adobe (-10.2%) disappointed with its outlook, although the business figures were in line with expectations.
McDonald’s gained 0.4 percent. The fast-service restaurant operator has ended litigation with former CEO Steve Easterbrook over his dismissal. Visa rose 1 percent after the credit card company launched an additional $ 12 billion share buyback program.
Ironnet collapsed 31.5 percent. The cybersecurity company has increased its losses with minimally reduced sales. In addition, Ironnet revised the outlook downwards.
INDEX last +/-% absolute +/-% YTD
DJIA 35.897,71 -0.1% -29,72 + 17,3%
S&P-500 4.668,66 -0,9% -41,19 +24,3%
Nasdaq-Comp. 15.180,44 -2,5% -385,15 +17,8%
Nasdaq-100 15.863,94 -2,6% -425,66 +23,1%
Maturity Yield Bp to VT Yield VT +/- Bp YTD
2 years 0.61 -4.4 0.66 49.6
5 years 1.18 -6.8 1.25 81.8
7 years 1.35 -5.3 1.40 70.1
10 years 1.43 -2.6 1.46 51.2
30 years 1.87 0.9 1.86 22.3
Forex last +/-% Thu, 8:22 am Wed, 5:31 pm% YTD
EUR/USD 1,1332 +0,3% 1,1286 1,1261 -7,2%
EUR/JPY 128,80 -0,0% 129,00 128,18 +2,2%
EUR/CHF 1,0416 -0,2% 1,0442 1,0424 -3,6%
EUR/GBP 0,8505 -0,1% 0,8519 0,8519 -4,8%
USD/JPY 113,67 -0,3% 114,14 113,82 +10,1%
GBP/USD 1,3323 +0,5% 1,3244 1,3219 -2,5%
USD/CNH (Offshore) 6,3792 +0,1% 6,3747 6,3784 -1,9%
BTC/USD 48,067.67 -1.4% 48,645.85 46,957.36 +65.5%
ROHOEL zuletzt VT-Settl. +/- % +/- USD % YTD
WTI/Nymex 72,07 70,87 +1,7% 1,20 +51,8%
Brent/ICE 74,70 73,88 +1,1% 0,82 +47,3%
METALS last previous day +/-% +/- USD% YTD
Gold (Spot) 1.798,47 1.777,62 +1,2% +20,85 -5,2%
Silver (spot) 22.46 22.08 + 1.8% +0.39 -14.9%
Platinum (Spot) 938.87 921.00 +1.9% +17.87 -12.3%
Kupfer-Future 4,29 4,18 +2,6% +0,11 +21,9%
Contact the author: [email protected]
DJG / DJN / cln
(END) Dow Jones Newswires
December 16, 2021 16:10 ET (21:10 GMT)