Heavy losses brought to the Wall on Wednesday the publication of the minutes from the last meeting of the Federal Open Market Committee (FMOC) of the Fed. According to the minutes, there was a heated discussion among the officials not only to accelerate the reduction of interest rates, but also to shrink the balance sheet of the Federal Reserve, amounting to 8.8 trillion. dollars.
In particular, as stated in the minutes, “some officials noted … that interest rate hikes could be justified sooner or faster than market participants expected. In addition, some noted that to begin shrinking the balance sheet of the central bank. ”
The minutes provided more details on the Fed’s shift in December to a more aggressive monetary policy. The policy makers agreed to hasten the end of the emergency bond-buying program that was implemented in the midst of the pandemic and estimated that they expect three interest rate hikes of 25 basis points each in 2022.
Following the publication of the minutes, the Dow fell to negative ground, finally losing 392 points, while by that time it added about 100, aiming for the third consecutive record in the same number of sessions at the beginning of 2022.
The losses of the Nasdaq and S&P 500 widened, as the shares of the technology sector were already under pressure in anticipation of the Fed’s practices but also due to the rise of US government bonds at the beginning of the new year. On Wednesday, his performance 10-year US government bond added 4 basis points to 1.70%, while since the beginning of the week it has strengthened by about 20 bp. The dollar recorded losses of 0.2%.
“The market reaction shows that some at Wall were surprised by the Fed’s record.
However, he said the Fed would remain cautious about tightening its monetary policy, especially if rising coronavirus cases had a negative impact on certain economic activities.
Meanwhile, US private sector job growth continued at a strong pace in December, as shown by the data announced today.
In particular, U.S. companies added another 807,000 jobs in December, according to the ADP Research Institute’s National Employment Report in collaboration with Moody’s Analytics.
Average analysts polled by Reuters polled 400,000 jobs in December. November data were revised downwards to 505,000 positions instead of the 534,000 originally announced.
Indicators – Statistics
On the dashboard, the industrial Dow lost 1.07% to 36,407.11 points, in its worst session since December 20. The wider S&P 500 fell 1.94% to 4,700.58 points, recording the biggest daily drop since November 26 and the technological Nasdaq fell 3.34% to 15,100.7, its worst day in 11 months.
From 30 shares that make up the Dow, 13 shares closed with a positive sign and 17 with a negative. Merck (+ 2.4%), Walmart (+ 1.37%) and Intel (+ 1.3%) led the gains, while Salesforce (-8.28%) and Microsoft (-3) recorded the biggest losses. , 84%).
The automotive sector was also in the spotlight. Tesla and Ford ended the rally in recent days, recording losses of 5.35% and 2.67% respectively. General Motors fell 4.56%.
Sony closed with a marginal increase of 0.03% to $ 128.59, far from the intra-conference high, after being found to record gains of 3.2%, exceeding $ 132 and on track for its highest price since April 2000. The Japanese giant announced on Wednesday that it plans to enter the electric vehicle market from the spring of 2022 and founded the company Sony Mobility in order to “investigate a commercial circulation” of electric vehicles.
The share of Beyond Meat not only moved away from the daily highs at 5%, but was on the opposite side with losses of 5.08%. The company announced that the vegetable fried chicken product will be available in KFC stores in the US from next week.
Citigroup: Sees the S&P 500 over 5,000 units
Meanwhile, Citigroup analysts have revised upwards their S&P 500 target price estimates for the end of 2022, estimating that it will exceed the level of 5,000 points for the first time, as Citi expects strong corporate profits to continue this year, as reported by Reuters.
The business results of the S&P 500 in 2021 exceeded even the most optimistic estimates of analysts, showing an annual increase in the first three quarters by 52.8%, 96.3% and 42.6% respectively, according to data collected Refinitiv.
For the fourth quarter, Refinitiv places the annual profit growth at 22.3%. In this context, Citigroup analysts revised the target price for the S&P 500 to 5,100 from 4,900 points in October, although they warn that the tightening of monetary policy by the Federal Reserve could create unfavorable conditions for valuations.
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I am Sophia william, author of World Stock Market. I have a degree in journalism from the University of Missouri and I have worked as a reporter for several news websites. I have a passion for writing and informing people about the latest news and events happening in the world. I strive to be accurate and unbiased in my reporting, and I hope to provide readers with valuable information that they can use to make informed decisions.
