Geopolitical tensions and interest rate outlook drag Wall Street down - Media24

Geopolitical tensions and interest rate outlook drag Wall Street down – Media24

Stocks fluctuated on Wall Street on Tuesday to end in the red, after fresh interpretations of the Fed’s monetary policy stance and geopolitical tensions.

According to final results at the close, the Dow Jones index fell 1.23% to 32,396.17 points, the Nasdaq fell 0.16% to 12,348.76 points and the S&P 500 fell 0.67. % at 4,091.19 points.

“Increased geopolitical concerns (…) in connection with Nancy Pelosi’s visit to Taiwan are upsetting the markets a bit,” said Peter Cardillo of Spartan Capital.

The visit of the Speaker of the American House of Representatives Nancy Pelosi to Taiwan, which Beijing considers as one of the provinces, captured the attention of investors, worrying about the risks of escalation with China.

Upon the arrival of the head of the American deputies, the Chinese Ministry of Foreign Affairs denounced “a serious violation” of American commitments vis-à-vis China, which “seriously undermines regional peace and stability”. .

Ms. Pelosi – the highest American official to visit the island in 25 years – for her part recalled in a press release this “unconditional support of America for the vibrant democracy of Taiwan”, considering that her presence did not contravene in ” no way” to long-standing US policy toward China.

Beyond geopolitical concerns, new comments from members of the US Federal Reserve (Fed) have changed the interpretations that investors had made of its chairman Jerome Powell’s press conference last week.

While Wall Street had celebrated the idea that the Fed could soon weaken its monetary tightening, several members of the Monetary Committee argued on Tuesday that we were “far from it”.

– Bond rates are tightening –

Thus the president of the antenna of the Fed of San Francisco Mary Daly, in an interview with CNBC, affirmed that the Central Bank “was far from having finished” with the fight against inflation.

Similarly his Chicago Fed colleague Charles Evans hinted that another sharp 75 basis point rate hike may still be on the table for the September meeting.

10-year bond yields immediately rebounded, climbing to 2.75% from 2.57% the previous day.

“The market has been shaken by these comments from the Fed which are tougher than expected,” acknowledged Art Hogan of B. Riley Wealth.

The eleven S&P sectors ended down, starting with the real estate sector (-1.30%) and the banks (-1.07%) which are very sensitive to rate hikes.

Among business results, Uber was celebrated by investors (+18.90% to 29.25 dollars) because even if the driverless car rental company suffered a heavy loss, its quarterly turnover fell. has soared, both in its transport activity but also in meal delivery.

Its turnover from April to June rose to 8.07 billion dollars against 7.36 billion expected.

The performance of the Caterpillar construction machinery group, on the other hand, weighed on the Dow Jones as the group’s sales disappointed at 14.2 billion dollars instead of the 14.35 billion forecast by analysts.

Caterpillar, whose title fell by 5.82%, is considered a barometer of the health of the world economy since its machinery, materials, equipment and services are used in many sectors of activity depending on the economic situation.

The group said it was suffering from supply chain issues and the impact of exchange rates.

On the Nasdaq, Pinterest pulled out of the game (+11.61% to 22.31 dollars) after slightly better than expected results and a stable number of users (433 million) despite the difficulties of advertisers.

The rise of an activist shareholder, Elliott Investment Management, which supports the management of the social network also gave investors confidence.

The airline JetBlue (-6.40%) took a nosedive after announcing a much stronger than expected loss caused in particular by rising kerosene costs as the company prepares to complete the takeover of Spirit after a bitter battle with its competitor Frontier.

Airbnb, which closed up 4.62%, lost 6.74% in post-closing electronic trading as its second quarter results showed fewer bookings than expected by the market.

Starbucks, whose title closed lower (-1.41%), regained the momentum lost after the close (+1.54%) as the chain managed to increase its sales thanks to price increases even if the frequentation of its coffees has been reduced.

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