Wall Street extends decline after Powell comments

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April 22, 2022 | 8:57 a.m.

The actions of wall street trade with falls this fridaywhile a sell-off of government bondsafter the latest sign that the US Federal Reserve (fed) aggressively tighten monetary policy to combat inflation.

At 8:40 am (Mexico City time), the S&P 500 down 0.45%, to 4,373.83 units, outlining a drop in the week. The Dow Jones Industrial Average falls 0.77%, to 34,525.86 units, headed for a weekly advance; Meanwhile he Nasdaq Composite down 0.41% to 13,120.52 units, heading for a loss for the week.

In Mexico the Index of Prices and Quotations (CPI) of the Mexican stock exchange (BMV) is up 0.11% to 53,302.12 points, on track for a weekly loss.

On the European side, the Stoxx 600 pancontinental falls 1.3%, dragged down by tech companies including German software firms SAP Y teamviewer, which fell 3.4% and 3.8%, respectively. In contrast, the Swiss cement company Holcim it rebounds 4.8%, after the company reported sales growth and improved its outlook for the year.

While in Asia, the Hang Seng Hong Kong lost 0.2% and the Nikkei 225 of Japan fell 1.6%. The Shanghai Compositeon the contrary, bucked the trend, rising 0.2%.

On the other hand, this week’s sharp rise in yields on government bonds showed signs of stabilization, with the yield on the 10-year Treasury note hovering around 2.920% in recent trading, its highest level since December 2018 and slightly higher than Thursday’s 2.917%.

Regarding the foreign exchange markets, the dollar index, which tracks the currency against the six most traded currencies, gained 0.3%, on pace with a gain for the week. Including this day, the index has risen for all but two April sessions, thanks to geopolitical concerns and impending interest rate hikes by the Fed.

Also read: Chedraui, Walmart and Soriana will avoid high inflation with higher revenues in 1Q22

Inflation worries

Concerns about inflation and the pace of monetary tightening by the Federal Reserve have remained at the forefront of investors’ minds this week and have helped spark swings in Wall Street’s major indices.

On Thursday, the chairman of the Fed, Jerome Powellgave investors a clear signal that the central bank is ready to tighten monetary policy more quickly, indicating that it is likely raise interest rates by half a percentage point at its May meeting.

According to The Wall Street Journal, a rate increase next month — following the Fed’s quarter-percentage-point hike in March — would mark the first time since 2006 that the central bank has raised its policy rate in back-to-back meetings.

Meanwhile, Powell’s comments injected new volatility into a fragile stock market that has been hit this year by the war in Ukraine, skyrocketing inflation and rising cases of COVID-19 in China.

Many traders are now concerned that the Fed’s tightening cycle could push the economy into a recession at a time when consumers are already uncomfortable with the economy.

Next week, investors will look at new figures from the University of Michigan on the consumer confidence in April.

Wall Street Stocks

Airline stocks rose. United Airlines add 2.2% and American Airlines earn 2.7%. On Thursday, American said its sales hit a record in March, the first month since the pandemic began in which the airline’s total revenue exceeded 2019 levels. United said it has been able to pass on rising fuel prices to consumers.

American Express it fell 0.6%, after the credit card company posted first-quarter net income of $2.1 billion, down from $2.24 billion a year earlier, even as spending on travel and entertainment rose.

Kimberly-Clark jumps 8.4%, after the maker of Huggies diapers and Cottonelle toilet paper raised its sales growth projection for 2022 and said first-quarter sales were up compared to a year earlier.

The actions of HCA Healthcare they fall about 11%, after the hospital chain lowered its guidance for the year. The company said first-quarter volume and revenue were offset by higher-than-expected inflationary pressures on labor costs.

Meanwhile, in the commodity market, oil prices drop and are headed for their third weekly loss, as bans for COVID-19 in China they were prolonged; in addition to the fact that the Fed determined that monetary policy will tighten aggressively to contain the inflation high of decades.

Don’t stop reading: US extends COVID vaccine requirements for non-citizens at land borders

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