(News Bulletin 247) – After a start to the session in the red, the New York Stock Exchange is trying to turn things around on Monday even if the trend remains hesitant, caught between losses in the oil sector, record yields and expectations a confirmation of the Fed’s restrictive bias.
At the end of the morning, the Dow Jones advanced nearly 0.2% to 30,878.2 points, while the Nasdaq Composite only nibbled away 0.1% to 11,463.5 points.
The markets remain suspended on the announcement, scheduled for Wednesday, of the Fed’s monetary policy decisions, which will be followed by an equally awaited press conference by its chairman Jerome Powell.
It seems understood that a new 75 basis point tightening is in the works, but investors want clarification on the inflation outlook and especially on the possibility of further rate hikes.
‘If the bankers surprised once again with more severe projections, all the assets would certainly suffer the blow’, warn the teams of La Financière de l’Echiquier.
The fear of a tightening of the Fed’s monetary policy is at the heart of the correction observed on the markets in recent months, first in the bond compartment and then in equities.
On the interest rate market, government bond yields remain very clearly on the rise, with that of 10-year Treasuries having even briefly exceeded the 3.50% threshold, a new high since 2010.
This rise in interest rates makes sovereign bonds a little more attractive, leading investors to abandon the stock market, while also contributing to increase the cost of financing for companies, which mechanically penalizes their valuation.
At the same time, the price of American light crude is stabilizing around 85 dollars a barrel after having tested new lows since the beginning of the year in the early morning.
The S&P energy index posted one of the worst sector performances of the day, with losses of 0.4%, behind telecoms (-0.8%), real estate (-1.1%) and health (-1.4%).
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