Wall Street down amid inflation fears
by Johann M Cherian, Sukriti Gupta et Carolina Mandl
The New York Stock Exchange ended lower on Tuesday after the publication of solid economic data fueling fears that a rebound in inflation could push the American Federal Reserve (Fed) to slow the pace of its monetary easing.
The Dow Jones index fell 0.42%, or 178.20 points, to 42,528.36 points.
The broader S&P-500 lost 66.35 points, or 1.11%, to 5,909.03 points.
The Nasdaq Composite fell 375.30 points (1.89%) to 19,489.68 points.
While they had initially recorded gains at the start of the session, the main Wall Street indexes flipped after the publication of a report from the US Department of Labor showing a greater increase than expected in the number of job offers in november.
According to separate data, activity in the services sector in the United States accelerated in December, although input prices rose to a nearly two-year peak.
“The markets are starting to admit that they thought they were at the end of the fight against inflation but that it will continue for longer,” commented Joe Mazzola, director of trading at Charles Schwab.
Following the publication of this data suggesting a solid economy, the yield on ten-year US Treasury bonds reached 4.699%, a record since last April.
Faced with the prolonged resilience displayed by the US economy, markets have lowered their expectations regarding the easing of monetary policy by the Fed and pushed back the date on which they anticipate the first rate cut by the US central bank in 2025.
Traders now expect a likely rate cut in June, CME's FedWatch shows, and then unchanged borrowing costs for the rest of the year.
The Fed is due to release the minutes of its December meeting this week, which investors will scrutinize.
Furthermore, investors continue to fear the possible impact on consumer prices of the vast customs duties promised by US President-elect Donald Trump, who will be inaugurated at the White House on January 20.
Nine of the eleven major sectors of the S&P-500 ended the session in the red, including technologies which fell by 2.39%, weighed down by heavyweight Nvidia which fell by 6.22%. Tesla lost 4% after BofA Global Research downgraded its recommendation for the automaker.
Several American banks, which will launch the results season next week, progressed, like Bank of America, up 1.5% after positive ratings from credit agencies.
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(Written by Jean Terzian)
