By Florian Faust
NEW YORK (Dow Jones) — The slide of the past few days continued on Wall Street on Friday. This ended a deep red stock market week characterized by interest rate fears and geopolitical tensions. As on the previous days, slight signs of recovery did not last, and the indices closed again at a daily low. The Dow Jones index fell another 1.3 percent to 34,265 points, while the S&P 500 and Nasdaq Composite dropped 1.9 and 2.7 percent, respectively. On the Nyse there were 733 (Thursday: 853) gains and 2,705 (2,503) losers. 105 (168) titles closed unchanged.
The tech-heavy Nasdaq Composite slipped deeper into correction mode. Dealers took the fact that there was so little resistance here as an alarm signal. Because support actually came from the bond market, yields fell again quite significantly. Technology stocks are considered to be particularly sensitive to interest rates. In the trade, reference was also made to the bear market at Netflix.
Fed meeting nervousness rising
The closer the US central bank meeting gets in the coming week, the more nervousness will increase, it was said in the trade. The mood continued to be depressed by the uncertainty about the pace and extent of the forthcoming interest rate hikes. Investors were hoping for clues from the upcoming Fed meeting. But the trade also pointed to growing tensions between Russia and the West over Ukraine, driving investors away from risky assets like stocks. “Geopolitical risk is a factor, monetary policy reassessment is a factor, and inflation in terms of cost pressures. Putting all these factors together is quite a change,” explained fund manager Georgina Taylor of Invesco. Her clear conclusion: “The risk premium for shares must rise”.
Meanwhile, Citigroup referred to the significantly lower upward revisions of corporate earnings expectations in January. “The peak of revision momentum could be a catalyst for market weakness,” the analysts said.
Netflix crashes – Peloton recovers from price slide
In the technology sector, Netflix collapsed by 21.8 percent – weighed down by a disappointing forecast for new customer growth. Some of the fourth-quarter figures were better than expected, but were of no interest. In tow, Walt Disney fell 6.9 percent in the Dow.
Peloton stock rebounded from the previous day’s slump. The stock fell about 24 percent after CNBC reported that Peloton plans to temporarily halt production of fitness equipment due to weak demand. The title has now climbed 11.6 percent. The company said it would take “significant corrective actions to improve profitability and optimize costs.” Sales for the second quarter were in line with expectations.
Schlumberger (-1.9%) beat estimates for the fourth quarter and expects industry demand to enter a multi-year growth cycle. Analysts praised the business card, but investors did not jump on it in the weak stock market environment. Despite positive business figures and an optimistic outlook, the shares of the railway company CSX lost 3.2 percent. Dealers criticized rising costs.
Dollar weakens slightly – oil prices fall more significantly
The dollar gave back some of the previous day’s gains. The dollar index fell 0.1 percent. According to RBC Capital, the greenback was mainly under pressure in January despite actually favorable yield differences. The rally in commodity prices and the weakness in US stocks have recently been a stronger factor than market interest rates, according to RBC expert George Davis. However, yields on the bond market fell again quite significantly, making the dollar less attractive. With the increased risk aversion, however, Bitcoin and Co came under the wheels.
Oil prices continued their downward trend of the previous day. Here, too, investors would have relied on risk minimization, it said. On a weekly basis, however, there was a big plus, it was the fifth weekly increase in a row. Betting that the Omicron variant would show milder trends, and geopolitical tensions in the Middle East and around the Ukraine crisis, centered on the oil producer Russia, had fueled oil prices for the week.
Meanwhile, the fall in market interest rates depressed the price of gold, which, like oil, recorded a strong weekly premium. The precious metal was again in demand as an inflation hedge in the past week, it said. Rising interest rate expectations did not change that.
There was renewed buying on the bond market, which traders explained as a general flight to supposed security. The uncertainty on the stock market as well as the Ukraine crisis have tempted investors to risk aversion.
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INDEX last +/-% absolute +/-% YTD
DJIA 34,265.50 -1.3% -449.89 -5.7%
S&P 500 4,397.73 -1.9% -85.00 -7.7%
Nasdaq Comp. 13,768.92 -2.7% -385.10 -12.0%
Nasdaq-100 14,438.40 -2.7% -408.06 -11.5%
US Bonds
Term Yield Bp to VT Yield VT +/-Bp YTD
2 years 1.00 -2.3 1.03 27.4
5 years 1.55 -3.5 1.59 29.4
7 years 1.71 -4.1 1.75 27.2
10 years 1.76 -4.9 1.81 24.9
30 years 2.06 -5.5 2.12 16.4
FOREX last +/- % Fri,8:35 Thu, 17:05 % YTD
EUR/USD 1.1344 +0.3% 1.1339 1.1348 -0.2%
EUR/JPY 128.94 -0.1% 129.24 129.41 -1.5%
EUR/CHF 1.0345 -0.3% 1.0366 1.0381 -0.3%
EUR/GBP 0.8368 +0.6% 0.8355 0.8310 -0.4%
USD/JPY 113.68 -0.4% 113.97 114.04 -1.2%
GBP/USD 1.3555 -0.3% 1.3569 1.3657 +0.2%
USD/CNH (Offshore) 6.3402 -0.1% 6.3453 6.3430 -0.2%
Bitcoin
BTC/USD 38,398.34 -6.7% 39,183.39 43,454.78 -16.9%
ROHL last VT-Settl. +/- % +/- USD % YTD
WTI/Nymex 84.88 85.55 -0.8% -0.67 +13.4%
Brent/ICE 87.64 88.38 -0.8% -0.74 +12.5%
METALS last day before +/- % +/- USD % YTD
Gold (Spot) 1,831.07 1,839.60 -0.5% -8.54 +0.1%
Silver (Spot) 24.26 24.51 -1.0% -0.25 +4.1%
Platinum (Spot) 1,036.95 1,043.28 -0.6% -6.33 +6.9%
Copper Future 4.51 4.58 -1.6% -0.07 +1.0%
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DJG/DJN/flf
(END) Dow Jones Newswires
January 21, 2022 16:15 ET (21:15 GMT)