Wall Street ends sharply lower, Dow Jones at year-end low

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Wall Street ends down sharply, Dow Jones at year-end low

The Wall Street trading floor on Friday

The New York Stock Exchange ended sharply lower on Friday, dragged down by the angst of a recession caused by the sharp monetary tightening underway.

The Dow Jones set a new record lower end of the year, down 1.62%. It had not finished a session this low since November 2020. As for the Nasdaq index, it lost 1.80%, while the broader S&P500 index dropped 1.72% .

The market is finally taking the Fed at its word: they will cause a recession to fight inflation, commented Chris Zaccarelli, Independent Advisor Alliance. This is bad news for markets, and even worse for workers and the economy.

Investors thus continued to react to the communication from the Fed, which raised its rate by 0.75 percentage points on Wednesday, but also signaled that it expected it to rise further. higher, and for longer, than Wall Street expected.

On Friday, the market chose to sell now and ask questions later, summarized Quincy Krosby of LPL Financial. We opt for cash, because volatility and uncertainty are rising.

The VIX index, which measures market volatility, rose to its highest in more than three months.

While all three of Wall Street's flagship indices finished a little higher than their lows for the year in session, it looks like they want to go higher low, to the point where all headwinds will be integrated, according to Quincy Krosby.

The coloring of the session was not improved, on the contrary, by the publication of the PMI index, which showed a clear rebound in activity in the United States in September.

Each time we have a better than expected indicator, brokers anticipate that it will allow the Fed to be even more aggressive on rates, according to Edward Moya , from Oanda.

The mood is all the more gloomy as no major indicator is expected before next Friday and the PCE price index, whose scope is relativized by the fact that ;it is late and does not relate to September, but to August.

Hundreds of stocks hit their lowest level of the year on Friday. The technology sector was particularly affected, such as Dell (-2.09%), HP (-1.40%), Intel (-1.96%) or Nvidia (-0.36%) , which lost almost two-thirds of its capitalization in one year.

But the berezina hasn't been limited to tech, and several old-economy heavyweights have also visited depths unseen since at least this time last year, from chemical group Dow (-1, 94%) to the 3M conglomerate (-1.01%), via Visa (-0.98%), the telecommunications operator AT&T (-1.42%) or Nike (-1.55 %).

Also at the lowest of the year, the courier group FedEx (-3.37% to 149.33 dollars), which published results well below market expectations, a week after a first early communication. The group has announced a savings plan of 2.2 to 2.7 million dollars on an annual basis and an increase in its prices of at least 6.9% on average on January 1 next.

Boeing was grounded (-5.37% to 131.26 dollars) after the announcement, Thursday after the stock market, of an amicable agreement with the American market regulator, the SEC, which accused the x27;aircraft manufacturer for lying about the risks of its 737 MAX aircraft. The transaction provides for the payment of an indemnity of 200 million dollars.

The chain of semi-wholesale supermarkets Costco was shunned (-4.26% to 466.40 dollars) despite the publication of a quarterly profit above expectations. The group has seen the cost of its goods rise faster than its turnover.

The bond market evolved in a disorganized fashion. While the US 2-year rate rose further, to 4.26%, the yield on US 10-year government bonds eased to 3.68%, from 3 .71% the day before.

As long as the 10-year rate falls, the market should remain stable, argued Jack Ablin of Cresset Capital. The contraction of this rate reflects expectations of a medium-term recession, and would help limit the tightening of credit conditions in the United States, which would be favorable to the economy and the markets. shares.

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