The New York Stock Exchange fell again on Monday May 9, weighed down by technology and energy stocks, reflecting concerns about inflation, the response of the American central bank (Fed) and a possible recession. According to final results, the Dow Jones index dropped 1.99% to 32,245.70 points.
The tech-heavy Nasdaq plunged 4.29% to 11,623.25 points, slipping below 12,000 points for the first time since November 2020. The S&P 500 technical threshold of 4,000 points did not hold, the index falling 3.20% to 3,991.24 points, the lowest for a year. “Investors are unable to buy on the downside, to buy the ”dip” (the trough, editor’s note). There is no trustsaid Gregori Volokhine of Meeschaert Financial Services.
“The market’s problem is that it does not see what would be the good news that would allow it to rebound“, he summarized. “And if we don’t buy when it drops, it can continue to drop…The New York indices therefore started the week deep in the red, after already six weeks of losses in a row for the Dow Jones and five for the Nasdaq and the S&P 500.Persistent inflation has prompted the Fed to become more aggressive in its rate hike campaign, but that has fostered uncertainty about its ability to stage a soft landing“, dread the Schwab analysts.
“Rising interest rates and strong dollar continue to undermine sentiment and signal tighter financial conditions, as war in Ukraine and lockdowns in China cloud the picture“, they added. Investors also showed their nervousness before the publication on Wednesday of the inflation figure in the United States for April (CPI index).
The rise in prices excluding food and energy could have continued to accelerate, with +0.4% over the month against +0.3% in March, according to analysts’ forecasts. Inflation should remain above 8% over one year, a peak in forty years. The greenback sailed around its highest in twenty years, while bitcoin, a risky asset, plunged 10% around 8:00 p.m. GMT, to the lowest in almost a year and a half, at 30,700 dollars. The technology sector, sensitive to the rise in interest rates which affect the future profits of these growing companies, has been hard hit. Apple lost 3.32%, Amazon 5.21%, Tesla 9.07%. In semiconductors, AMD and Nvidia lost more than 9%.
Reflecting fears for oil demand and the pace of global activity with anti-Covid health restrictions in Beijing, energy stocks and crude prices have plunged in concert. Crude oil prices ended down almost 6%. Oil stocks, the sector in the best shape since the start of the year and therefore also subject to profit taking, lost 8.30% within the S&P.
Exxon ended down 7.81%, Chevron 6.63% and Occidental Petroleum fell 10.92%. The VIX index says “fear indexwhich measures market volatility, soared to nearly 35%, its highest level in two months.