Wall Street drops sharply after the results of Goldman Sachs - 01/18/2022 at 22:41

Wall Street drops sharply after the results of Goldman Sachs – 01/18/2022 at 22:41

Wall Street is finished below

Wall Street is finished below

Par Lewis Krauskopf and Bansari Mayur Kamdar et Shreyashi Sanyal

(Reuters) – The New York Stock Exchange closed sharply lower on Tuesday as weaker-than-expected earnings from Goldman Sachs weighed on financial data as major technology stocks extended their decline in the face of rising bond yields.

The Dow Jones Industrial Average fell 1.51%, or 543.34 points, to 35,368.47 points.

The broader S&P-500 index lost 85.74 points, or 1.84%, to 4,577.11 points.

The Nasdaq Composite Index fell 386.86 points (2.60%) to 14,506.90 points.

The Nasdaq, which saw the biggest drop during the session, is now down about 9.7% from its record close on November 19.

Goldman Sachs saw its stock fall 7% after reporting fourth-quarter earnings without consensus due to weak trading activity.

In the aftermath, the financial sector fell 2.3%, weighing on the S&P-500.

The yield on two-year US Treasuries, which is most sensitive to changes in policy rate expectations, jumped to stand above the 1% threshold while 10-year notes rose to a two-year high as traders braced for more aggressive action by the Fed. The Federal Reserve to fight inflation.

This surge in bond yields at the start of 2022 is particularly heavy on major technology stocks and high-growth stocks.

Mona Mahajan, strategist at Edward Jones, said the high inflation data “is making markets fearful that the Fed will take action, so we’re seeing a rally in bonds”.

“It is not just the rise in bond yields but the speed of that rise (…) that is causing some form of indigestion in the market,” she said, particularly for the more speculative asset classes.

Ten of the S&P-500’s eleven major sectors ended in the red, including technology, which saw the biggest drop. Only the energy sector advanced 0.4%.

Investors are watching the Federal Reserve’s monetary policy meeting next week, after which they hope for more clarity on the US central bank’s anti-inflation actions.

A week before the Federal Reserve’s monetary policy meeting, expectations of monetary policy tightening again are at the forefront of investor fears, with some analysts no longer ruling out additional acceleration to end asset purchases by the central bank ahead of the first expected rate hike in March.

According to data released last week, US consumer prices rose year-on-year in December at their fastest pace in four decades.

On the value front, Activision’s stock jumped 26% in the wake of Microsoft’s announcement that it was acquiring the video game publisher for nearly $70 billion.

Other video game publishers, including Electronic Arts, have made progress.

Microsoft shares fell 2.4 percent.

(French version by Jean Terzian)


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