Dive over 2% on the Wall with a sales barrage at the end

With the pressures escalating towards the close of the session, the key indicators of the American market completed the trades, recording significant losses a few hours before the announcement of the new data on inflation.

In particular, the Dow Jones industrial average closed with losses of 1.94% or 638 points, falling to 32,272 points, while the broader market index, the S&P 500, lost 2.39%, slipping to 4,017 points.

At the same time, the consistently high yields of US bonds “strangled” once again the development securities, with the result that the technologically weighted Nasdaq led the losses with -2.75% and closed at 11,754 points.

The 10-year US saw its yield reach as high as 3.073% today, as high as May 11, when the European Central Bank announced it was ending its bond-buying program and preparing to raise interest rates.

The ECB has confirmed that it intends to raise interest rates by 25 basis points in July and possibly again in September.

At the same time, it revised upwards its estimates for the course of inflation to 6.8% in 2022 from 5.1% previously, downgrading the growth outlook.

Although the market took the ECB’s announcement for granted, the head of the Bank, Kritin Lagarde, left the door open for a larger increase in September, of the order of 50 bp. to Fed standards that pursue a more aggressive monetary policy.

Nervousness in the bond market eased quickly, however, but not so much that the yields escalated with that of the 10-year US being at 3.047% at the close of the session.

Against this backdrop, tech titles were once again on the verge of liquidation, with Facebook parent company Meta plunging 6.4%, while Amazon lost 4.1%, Apple 3.6% and parent company of Google Alphabet 2%.

Tesla did not escape the “technological manos” either, which started the session with a jump of more than 4% after the upgrade of UBS to “buy”, but ended at -0.9%.

In the high capitalization of Dow Jones characteristic is that only Home Depot was saved with a positive sign but small gains of 0.8%, while Boeing sank by 4.2%, Walt Disney lost 3.76%, Visa 3,465 Goldman Sachs 3 , 3% Nike 3.1% and American Express 3%.

The market is now looking at tomorrow’s data for the consumer price index in May, which is expected to show a new escalation of inflation by 0.7% on a monthly basis.

The structural index, which does not include volatile food and energy prices, is also estimated to accelerate significantly by 0.5%.

“We are preparing for what the new data on inflation may show tomorrow,” said Peter Tuz, president of the Chase Investment Counsel.

“If the overall pace is high and the construction sector shows some decline, I think the markets could respond to that because it will show that things are improving somewhat,” he added.

The fact that inflation remains on an upward trajectory frightens investors about the Fed’s aggression in the interest rate hike that has begun.

The federal bank has already raised its key interest rate by 0.75% and two more increases of 0.5% each in the next two meetings, next week and in July, are considered a given.

At the same time, oil prices remain at a three-month high (which is also high since 2008) with Brent currently hovering above $ 123 a barrel.

Elsewhere, weekly US unemployment benefits were at their highest level since mid-January, although the increase did not signal concerns about the country’s labor market.

In particular, in the week ended June 4, 229,000 Americans applied for unemployment benefits, a number that increased by 27,000 from last week’s upward revision and significantly more than the analysts estimate for 220,000.

At the same time, however, the four-week moving average for existing benefits claims fell slightly to 1.32 million, its lowest level since January 10, 1970.