A new rally in bond yields leads to large losses in Wall Street indexes on Tuesday, with the technology industry again at the center of the pressure.
The 10-year yield in the US was found today to gain 4 basis points, climbing to 1.83%, which is the highest level since January 2020. The two-year yield jumped by 9 basis points. exceeding 1% for the first time since February 2020.
The rally in yields comes as investors prepare for four interest rate hikes by the Federal Reserve this year to curb inflation. The Fed is meeting next week.
In recent weeks, high-ranking central bank executives have been stressing in their public appearances the need to put a brake on the price spike that led annual inflation to a nearly 40-year high by the end of 2021. Investors are now waiting for the central bank to move to March first increase in interest rates.
At the same time, investors are expecting a barrage of corporate results in the coming days, with a total of 35 companies only from the S&P 500 index to announce their quarterly statements by Friday. Goldman Sachs Group today announced a 13% drop in earnings to $ 3.81 billion or $ 10.81 per share for the fourth quarter, losing Wall Street analysts’ estimates.
Indicators – Statistics
On the board, the Dow Jones industrial average lost 595.16 points or -1.66% to 35,316.65 points, while the broader S&P 500 fell by 89.37 points or -1.92% to 4,573.71 points. The technological Nasdaq drops 359.20 points or -2.41% to 14,535.27 points.
Of the 30 stocks that make up the Dow Jones industrial average, only three are moving with a positive sign and 27 with a negative. The biggest gains are made by Merck with gains of $ 0.58 or 0.71% at $ 81.96, followed by Visa at $ 216.15 with gains of 0.69% and Walt Disney at $ 152.49. with an increase of 0.36%.
The three stocks with the biggest losses are Goldman Sachs Group (-8.36%), JPMorgan Chase (-4.30%) and Cisco Systems (-2.57%).
In business developments, the focus is on Microsoft announcing that it has reached an agreement to acquire Activision Blizzard for $ 68.7 billion, or $ 95 per share. This is the largest acquisition by Microsoft in its history.
The acquisition will create the third largest revenue-based video game company, after Tencent and Sony. Activision shares jumped 30%, while Microsoft fell 0.6%.
At the end of the day, factory activity in New York State “dipped” in January compared to the previous month, according to data released today by the Federal Reserve Bank of New York.
In particular, the Empire State Consumer Price Index fell to -0.7 points in January from 31.9 points in December, well below 25.5 points as economists’ convergent estimates in a poll by The Wall Street Journal. Any measurement above zero indicates that the manufacturing sector in the area is expanding, while a negative measurement indicates a contraction.
The slightly negative measurement of the index follows 18 consecutive months of improvement and indicates that the growth of manufacturing activity in the region “froze” after a period of significant expansion, as noted by the Fed.
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