(New York) The New York Stock Exchange dropped sharply late in trading on Wednesday, reacting to a modest rate hike from the Fed, made less aggressive on inflation due to the banking crisis.
The Dow Jones index lost 1.63% to 32,030.11 points, the tech-heavy NASDAQ dropped 1.60% to 11,669.96 points and the S
The Central Bank raised rates by just a quarter of a percentage point and signaled that it was considering only one more such hike in the near term.
Overnight rates are now in the range of 4.75% to 5.00%. Inflation is hovering at 6% for the year in February, according to the CPI consumer price index.
At the same time, Fed Chairman Jerome Powell reassured the financial world about the recent banking crisis by indicating that American savers’ money was “safe” and that the banking system remained sound.
On the rates and inflation front, “the statement was pretty ‘dove’,” that is, supportive of looser monetary policy, said Peter Cardillo of Spartan Capital Securities. But Jerome Powell “also said it was difficult to predict a recession,” he qualified.
This more lax tone, briefly welcomed by the stock market indices in session, finally weighed on Wall Street, which sees it as a way for the Fed to offset the tightening of financial conditions caused by the banking crisis, noted for his part Karl Haeling of LBBW .
“Financial conditions have tightened and probably more than traditional indicators show,” Powell said. The Committee statement meanwhile warned that the recent banking crisis was “likely to weigh on economic activity”.
The head of the institution also stressed that the Fed was “committed to learning the lessons of the episode” banking and warned that more regulation and supervision are needed.
“As soon as we talk about more regulation, it’s a negative for equities,” noted Peter Cardillo.
The bond market, meanwhile, welcomed the moderate tone from the Fed, with yields on 10-year Treasuries easing to 3.44% from 3.60% the previous day. As for the dollar, it collapsed by almost 1% against the euro.
As for values, the securities of American regional banks which had rebounded strongly the day before, have plunged again. Thus First Republic lost 15.47% and Western Alliance Bancorporation almost 5%.
California bank PacWest, which announced on Wednesday that its deposits had shrunk by 20%, saw its shares fall 17.12% to 10.12 dollars.
Of the 11 sectors of the S
The very volatile action and mascot of GameStop small carriers jumped 35.18%.
The video game distributor posted its first profit in two years in the fourth quarter, but more because of cuts in its operating costs than thanks to the health of its declining sales.
The company specializing in space launches for small Virgin Orbit satellites, struggling a few months after the failure of a major operation, soared 33.12% to 59 cents.
The company, whose operations were put on “pause” by British billionaire Richard Branson last week “in an effort to conserve capital”, plans to resume operations on Thursday.
Canadian and U.S. equity markets plunged in the final hour of trading on Wednesday and closed lower, with major U.S. indices all down about 1.6% after the U.S. Federal Reserve hiked interest rates. interest of 0.25 percentage point.
The composite index S
In the currency market, the Canadian dollar traded at an average rate of 72.93 US cents, down from 72.96 US cents on Tuesday.
On the New York Commodity Exchange, crude oil rose US$1.23 to US$70.90 a barrel, while natural gas fell US$18 cents to US$2.31. US$ per million BTUs.
The price of gold advanced US$8.50 to US$1949.60 per ounce and copper rose 5 cents US to US$4.04 per pound.
