The New York Stock Exchange ended slightly in the red on Wednesday another volatile session to start the month, after a series of new data on the American economy.
According to final results, the Dow Jones index dropped 0.54% to 32,813.23 points. The Nasdaq, with strong technological coloring, lost 0.72% to 11,994.46 points. The S&P 500 fell 0.75% to 4,101.23 points.
The indices had started clearly in positive territory until the mid-morning publication of an ISM manufacturing activity index in the United States which surprised everyone by being better than expected in May.
This unexpected acceleration in manufacturing activity pushed bond yields and the dollar higher, while equities fell. Rates on 10-year Treasury bills stood at 2.92% after the close against 2.84% the previous day.
“The ISM index (…) and its component on the price index also stronger than expected were the catalysts” which propelled the dollar higher, said Brad Bechtel, director for the foreign exchange market. at Jefferies.
“We are going to have periods in the coming months when the market thinks we have to do more against inflation and periods when on the contrary we think we have to do less and when fears of recession take over. on it,” the analyst explained.
He promised continued volatility, “as we’re going to go back and forth over the next few months until we have firm signs that inflation is easing.”
For Peter Cardillo of Spartan Capital Securities, the glass was rather half full: “the very strong dollar, the tension of bond yields caused the slide of the indices (…) but they nevertheless remain not far from the solid gains made during the week last”.
After sliding sharply, the indices recovered some lost ground after the publication of the Fed’s Beige Book, the last report on the state of the United States economy before the next monetary meeting of the Central Bank scheduled in two weeks.
In this report, “some regions have reported modest growth, the job market has remained tight and inflation remains high,” Cardillo said. “But all of this the market already knew, which is why the indices stabilized,” he said.
The Federal Reserve, for its part, has begun shrinking its balance sheet, with nearly $9 trillion in Treasury bills and other bond securities, another way to tighten monetary conditions, Wells Fargo analysts noted.
Until September, the Fed will reduce its assets by some 47.5 billion dollars per month to increase to 90 billion monthly thereafter.
On the odds, all sectors ended in the red, except energy (+1.76%).
Banks led the decline (-1.67%) as Jamie Dimon, the boss of JPMorgan, threw a stone into the water during a conference, believing that investors should prepare “for a hurricane”. “The hurricane is right there coming our way,” he said of the combined challenges of inflation, monetary tightening and war in Ukraine.
Levi Strauss (+1.16% to 18.37 dollars) was briefly suspended from trading before announcing an increase in its commercial objectives for the next five years.
The Salesforce customer relationship management platform gained 9.88% to 176.07 dollars as the group raised its forecast for the full year.
Lingerie group Victoria’s Secret soared 9.93% to $44.89 after results were in line with forecasts despite the impact of inflation and supply chain challenges.
Meta (Facebook) widened its losses at the end of the session (-2.58% to 188.64 dollars) with the announcement just before the closing of the resignation of Sheryl Sandberg, number two and director of operations of the American network giant social.