Wall Street, the worst session of 2022: Nasdaq at peak (-4.5%)

Wall Street in deep red on the day that promises to be the worst since the beginning of 2022. The Nasdaq index drops 4.96 %% at 12,863.69 points, the Dow Jones loses 2.99% to 33,043.86 points while the S&P 500 leaves 3.36% at 4,155.80 points on the ground. The collapse is likely due to the re-emergence of inflation fears and lower than expected economic growth. To affect the trend there is also the surprise increase in weekly unemployment benefitswhich suggest that the American job market is actually less healthy than estimated.

Stocks down

The most pronounced declines were in high-growth stocks, with Apple and other tech giants like Amazon, Tesla and Microsoft which fell between 5% and 8%. In addition to the negative trend, Etsy and eBay fell 16.9% and 10.57% respectively after forecasts down for the second quarter and Shopify dropped 17% after falling short of market expectations. Energy stocks also fell, with Chevron down 1.46%, ExxonMobil down 1.95%, ConocoPhillips down 2.51%. The Aerospace & Defense sector was also negative with Lockheed Martin losing 1.26% and L3Harris Technologies 0.83%.

The response of the European stock exchanges

The European stock exchanges, after a brilliant morning, became infected by the trend of Wall Street. In Piazza Affari the Ftse Mib index closed down 0.60% to 23,759.71 points after a sprint start. Countertrend Unicredit, which closed up by 2.08%, the best in the list, after the quarterly results. Banca Mediolanum also performed well, + 1.16%, and Campari, + 1.08%. Moncler collapsed, -5.63%, but also Iveco, -3.07%, Pirelli, -2.80%, and Enel, -2.24% following the quarterly report. Tim registers -1.62% after the quarter. Flare-up of the spread and yields on government bonds, in the wake of US Treasuries. The 10-year BTP yield rose over three percent to + 3.03%, at the end, the Bund yields 1.04% and the spread stands at 198 basis points. In Europe, Frankfurt (-0.49%), Paris (-0.43%) were also negative, while London rose slightly to + 0.17% after the rise in British rates from a quarter of a point to 1%.

The Fed’s decision

The Federal Reserve raised its federal funds policy rates by 0.50% to within a range of 0.75% to 1% and announced that it will start reducing its balance sheet starting in June. The half point retouch, decided unanimously, it was expected by the market and represents the widest intervention since May 2000. The objective is to combat inflation, which in March rose to 8.5%, as had not happened since 1981. Jerome Powell specifically ruled out the prospect of a 0.75 percentage point increase at a future meeting, while traders had so far rated the likelihood of such a scenario at 99% at the next Fed meeting in June. However, after the collective euphoria, the market is waking up and realizing that none of the structural problems that led to the decline have been resolved, noted Adam Sarhan of 50 Park Investments. Inflation remains high – he pointed out – the Fed will continue to raise rates and the slow growth picture has not changed.

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Wall Street, the worst session of 2022: Nasdaq at peak (-4.5%)

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