NEW YORK (dpa-AFX) – The US stock exchanges extended their recent losses somewhat after the long weekend. The most important indices were only able to stay in the profit zone for a short time during trading on Tuesday. Concerns remain that the US economy will tighten given the monetary policy into a clear recession.
The Dow Jones Industrial (Dow Jones 30 Industrial) fell 0.55 percent to 31,145.30 points. The leading US index is currently at the level of mid-July. The market-wide S&P 500 fell 0.41 percent to 3908.19 points. The tech-heavy NASDAQ 100 fell 0.72 percent to 12,011.31 points.
The US Federal Reserve is trying to curb the sharp rise in prices with higher interest rates. However, this makes credit more expensive, so companies tend to invest less and consumers consume less. As a result, there is a risk of a strong economic slowdown.
On Tuesday, the latest types of economic activity were evaluated in such a way that the Fed can stick to its course of hefty interest rate hikes. In August, the mood in the US service sector had surprisingly brightened, as reported by the Institute for Supply Management.
“The inflationary potential, which is also signaled by the low unemployment rate, remains high,” wrote analyst Ralf Runde from Landesbank Hessen-Thüringen. As such, the Fed is likely to continue aggressively tackling inflation, raising interest rates by 0.75 percentage points this month.
Against this background, the year should not be easy for investors, as Morgan Stanley analyst Michael Wilson predicted. He dropped his earnings growth forecast because the weak economy was affecting the stock market. For 2023 he expects a decline of three percent – even if there is no recession.
Among stocks, Ciena Corp (CIENA) fell a good three percent after skeptical analyst comment. The telecom company’s goals are lofty and market expectations may be falling, wrote JPMorgan analyst Samik Chatterjee. Even if the forecasts were met, there would be little room for improvement for the papers as they were already trading close to their long-term valuation multiples.
The shares of the ailing bath and living room decorator Bed Bath & Beyond (Bed BathBeyond) lost more than 18 percent after the sudden death of the chief financial officer Gustavo Arnal became known on Friday. He fell to his death from a skyscraper in Manhattan.
Bed Bath & Beyond announced major measures in late August to get back on its feet, boost growth and profitability, and improve the balance sheet and free cash flow. Jobs are to be cut and low-yield brand shops closed.
The euro came under pressure and last cost 0.9903 US dollars in New York. Order data from German industry was weak. The European Central Bank had previously set the reference rate at $0.9928 (Monday: $0.9920). The dollar thus cost 1.0073 (1.0081) euros.
US government bonds suffered significantly from the robust US economic data. Most recently, the futures contract for ten-year Treasuries (T-Note Future) fell by 0.92 percent to 155.58 points. In return, the yield on ten-year government bonds rose to 3.34 percent./la/nas
— By Lutz Alexander, dpa-AFX —