New York Stock Market: The Fear of Interest Rates
At first the mood is still good, the quarterly figures of many large US corporations offer positive prospects. But then Wall Street went downhill.
Investors’ fears of sharply rising interest rates upended the initially good mood on the New York stock market on Thursday. Positively received quarterly figures from large US companies quickly faded into the background.
The leading index Dow Jones Industrial lost 1.05 percent to 34,792.76 points. The market-wide S&P 500 fell by 1.48 percent to 4393.66 points. The tech-heavy Nasdaq 100 slipped 1.99 percent to 13,720.45 points. High-growth technology groups suffer particularly from rising interest rates.
Market participants referred to statements by US Federal Reserve Chairman Jerome Powell, who spoke about a major rate hike at the next Fed meeting in early May. A 0.50 percentage point hike in interest rates is on the table, Powell said. There has recently been repeated speculation on the market about a major interest rate hike. The central bank would thus tighten its monetary policy even more quickly. The background is the high inflation. But investors worry that tightening too quickly could jeopardize economic growth.
After the Netflix shock in the middle of the week, investors were particularly interested in the quarterly figures of the electric car manufacturer Tesla, which impressed with further sales and profit records. Shares initially gained double-digit percentage gains, but ended the day up 3.2 percent.
Netflix, on the other hand, lost another 3.5 percent after their 35 percent drop in price the day before. Other tech values also lost feathers. The titles of the Facebook group Meta, for example, and those of the graphics chip manufacturer Nvidia each slipped by more than six percent.
Airlines fared better, most notably United Airlines up 9.3 percent. Despite deep red figures at the start of the year, the company expects business to recover strongly towards the summer. Demand is booming so much that in the current quarter not only a return to profitability but even record sales are to be expected. American Airlines stocks rose 3.8 percent and also gained investor confidence with their outlook.
At AT&T, investors were happy about a price increase of four percent after the telecom group had won significantly more new customers in the first quarter than analysts had expected.
The chemical group Dow Inc reported a surge in sales and profits for the past quarter despite higher energy prices. The shares reached a record high over the course of the year, finally gaining 2.9 percent at the top of the leading Dow Jones index.
The euro traded at $1.0837 after the US close. The European Central Bank had set the reference rate at 1.0887 (Wednesday: 1.0830) dollars, the dollar thus cost 0.9185 (0.9234) euros.
On the US bond market, the futures contract for ten-year Treasuries (T-Note Future) fell by 0.54 percent to 118.86 points. The yield on 10-year government bonds rose to 2.89 percent, but remained below its highest level since late 2018, hit 2.98 percent on Wednesday.