MARKETS US/Wall Street achieves shaky stabilization

NEW YORK (Dow Jones) — After hefty losses at the end of the week, Wall Street managed a shaky stabilization on Monday. The tech-heavy stock actually rallied after the recent Nasdaq sell-off – though it did not erase recent losses. Business was extremely volatile, which retailers took as evidence of the prevailing nervousness.

Market participants were unsettled by mediocre data coupled with interest rate hike fantasies and higher market interest rates. The Dow Jones index gained 0.3 percent to 33,062 points, while the S&P 500 and Nasdaq Composite rallied 0.6 and 1.6 percent, respectively. The tech-heavy index fell 4.2 percent on Friday on profit-taking and also marked its sharpest monthly decline since 2008 in April. At the beginning of the week, a total of 1,432 (Friday: 603) price winners and 1,895 (2,716) losers were counted, and 187 (122) titles closed unchanged.

Before the interest rate decision by the US Federal Reserve on Wednesday, investors were noticeably cautious. The published data hardly matched the expected interest rate hikes. The second reading of the Markit Purchasing Managers’ Index for the manufacturing sector was slightly revised downwards and thus just missed expectations. According to the ISM, however, activity in US industry grew more slowly in April than before. Here, too, market players had hoped for more. After all, both indices continued to signal clear growth. The construction costs were also not convincing. The prospect of further rising US interest rates with weakening economic data would have prevented a stronger recovery, it was also said with a view to the recently shrunken US GDP.

Most traders expected the Fed to raise interest rates by 50 basis points because of the extremely high inflation. On the interest rate futures market, a further interest rate hike of then 75 basis points in June was priced in with a higher probability than before. “We haven’t seen a capitulation yet, and while no one can predict these things perfectly, I expect further market weakness,” said Bahnsen Group chief investment officer David Bahnsen.

Dollar continues to show strength ahead of Fed rate decision

The dollar rebounded sharply at the start of the week after Friday’s profit-taking. The dollar index was up 0.6 percent. This reflects above all the hawkish course of the US Federal Reserve, which is likely to raise interest rates again on Wednesday, according to Unicredit.

Oil prices recovered from the daily lows and rose. An embargo against Russian oil by the EU was beginning to take shape. Despite a tight offer with falling production in Russia, the oil cartel Opec will not increase production, it said.

Speculation on rising key interest rates put the price of gold under pressure – the firm dollar and increased market interest rates also put pressure on it. The precious metal posted its highest daily loss in around two months.

Yields rose on the bond market with the prospect of rising interest rates. The ten-year yield on government bonds exceeded the 3 percent mark for the first time since 2018.

Berkshire Hathaway with earnings down

Among individual stocks, Berkshire Hathaway fell 1.4 percent after Warren Buffett’s investment firm suffered a first-quarter profit decline.

Apple (+0.2%) lagged the development of technology stocks. The EU Commission accuses the technology group of exploiting its dominant market position in the market for mobile wallets.

In the takeover competition for the US low-cost airline Spirit Airlines, the original bidder Frontier Airlines retained the upper hand. Spirit has rejected an offer of $3.6 billion in cash from competitor Jetblue Airways. The airline prefers a merger with Frontier. Frontier offered less than $2.9 billion in cash and shares. However, Spirit fears the risk that the competition authorities will prohibit a merger with Jetblue. Spirit Airlines fell 9.4 percent, Jetblue rose 2.6 percent.

===

INDEX last +/-% absolute +/-% YTD

DJIA 33,061.50 +0.3% 84.29 -9.0%

S&P 500 4,155.38 +0.6% 23.45 -12.8%

Nasdaq Comp. 12,536.02 +1.6% 201.38 -19.9%

Nasdaq-100 13,075.85 +1.7% 221.04 -19.9%

US Bonds

Term Yield Bp to VT Yield VT +/-Bp YTD

2 years 2.72 +0.8 2.71 199.3

5 years 3.01 +5.5 2.96 175.1

7 years 3.04 +5.6 2.98 159.6

10 years 2.99 +5.5 2.93 147.7

30 years 3.04 +4.2 3.00 114.3

FOREX last +/- % Mon 8:15 Fri 17:25 % YTD

EUR/USD 1.0504 -0.4% 1.0516 1.0538 -7.6%

EUR/JPY 136.73 -0.2% 137.11 136.76 +4.5%

EUR/CHF 1.0274 +0.1% 1.0246 1.0251 -1.0%

EUR/GBP 0.8412 +0.4% 0.8385 0.8390 +0.1%

USD/JPY 130.17 +0.2% 130.39 129.78 +13.1%

GBP/USD 1.2487 -0.8% 1.2541 1.2561 -7.7%

USD/CNH (Offshore) 6.6750 +0.4% 6.6859 6.6419 +5.0%

Bitcoin

BTC/USD 38,407.89 +0.2% 39,007.25 38,974.71 -16.9%

ROHL last VT-Settl. +/- % +/- USD % YTD

WTI/Nymex 105.36 104.69 +0.6% 0.67 +43.6%

Brent/ICE 108.27 107.14 +1.1% 1.13 +42.5%

METALS last day before +/- % +/- USD % YTD

Gold (Spot) 1,861.75 1,896.80 -1.8% -35.05 +1.8%

Silver (Spot) 22.63 22.78 -0.7% -0.15 -2.9%

Platinum (Spot) 938.60 946.83 -0.9% -8.23 -3.3%

Copper Future 4.28 4.40 -2.9% -0.13 -3.9%

===

Contact the author: [email protected]

DJG/DJN/flf

(END) Dow Jones Newswires

May 02, 2022 16:23 ET (20:23 GMT)