Wall Sell-off After Wednesday ‘Relief Rally’ – Losses Over 2.5%

LAST UPDATE: 18.03

Wall Street stock indexes “abandoned” almost all of Wednesday rally rally gains on Thursday, despite relief following statements by US Federal Reserve Chairman Jerome Powell that the Fed has no plans to more aggressive form of increases in the next period, of the order of 75 basis points. Yesterday, for the first time since May 2000, the Fed raised interest rates of 50 basis points.

On the dashboard, the industrial Dow Jones falls by 797.28 points or 2.34%, with the widest S&P 500 to “lose” 123.57 points or 2.87% and the technological Nasdaq to suffer losses of 524.07 points or 4.04%.

Shares of tech giants are under strong pressure, with Facebook parent company Meta Platforms and Amazon losing 5.8% and 7.1% respectively. Microsoft’s stock is down 4.7%, while Salesforce is down 6.3%.

Shares in the e-commerce sector are a significant source of the downward trend, as it recorded a series of disappointing quarterly corporate results.

Shares of Etsy and eBay are down 15% and 8% respectively, following the announcement of weaker-than-expected guidance for 2022 revenue. Shopify fell more than 17% as it moved below the benchmark as in terms of profits, as well as in terms of quarterly revenue.

In addition to raising its key interest rate, the Fed announced that it will start reducing its balance sheet as early as June.

Despite Powell clarifying the course of interest rate hikes, the US Federal Reserve remains open to pushing interest rates above the “neutral level” (estimated at 2.5% and considered to be the crossroads between easing and tightening monetary according to Zachary Hill, head of portfolio strategy at Horizon Investments.

“Despite the tightening of financial conditions we have seen in recent months, it is clear that the Fed wants to go further,” he said. “Higher stock prices are not compatible with such a desire, unless supply chains recover quickly or workers return to the labor market with momentum.”

The yield on the 10-year US government bond, on Thursday morning (Eastern US time), jumped again more than 3%.

Carlyle Group co-founder David Rubenstein stresses that investors need to “get back to reality” in the face of winds blowing on both the markets and the US economy, including because of the war in Ukraine and of high inflation.

Both the S&P 500 and the Nasdaq moved to their lowest levels for 2022 this week, after a difficult April for the US stock markets.

Of the 30 Dow shares, only 1 is moving positively, while 29 are moving negatively. She records her profits Amgenwhile the losses are led by those of Salesforce, Nike, Microsoft.

Unemployment benefit applications in the US increased

The number of Americans applying for unemployment benefit for the first time rose more than expected last week, although it remained at levels compatible with a healthy job market.

In particular, the initial unemployment benefit applications increased by 19,000 to the seasonally adjusted size of 200,000 for the week ended April 30, according to the US Department of Labor. Analysts’ average estimates in a Reuters poll put the applications at 182,000 for the past week.

Applications have been hovering below the 200,000 level since mid-February amid strong labor market demand. Government figures released this week show that job openings hit a new record of 11.5 million at the end of March.

Applications had skyrocketed to a record 6.137 million in early April 2020 when a pandemic forced the federal government to impose massive lockdowns across the country.

The figures come shortly before the Labor Ministry’s report on employment last month. Government figures to be released tomorrow are expected to show that jobs in the country rose by 391,000 in April after rising by 431,000 in March, according to a Reuters poll of analysts.