Wall Street ends at half mast, undermined by household confidence

Wall Street ends at half mast, undermined by household confidence

UPDATE DAY

The New York Stock Exchange, which had started well on Tuesday, trying to continue the momentum of last week, ended at half mast, undermined by the loss of confidence of American consumers.&nbsp ;

According to final results at the close, the Dow Jones index fell 1.56% to 30,946.99 points, the tech-dominated Nasdaq, which had pulled the rebound the previous week , again dragged the market down, plunging 2.98% to 11,181.54 points.

The broader S&P 500 index lost 2.01%, to 3821.55 points.< /p>

However, the session got off to a good start with positive news from China on its zero-tolerance policy towards Covid-19.

Beijing has, in fact, announced that it has halved the duration of quarantines for travelers arriving in China, “the biggest change to date in its policy to fight the pandemic which has isolated the country and caused economic concerns”, welcomed Art Hogan of National Securities.

But this balm in the heart of investors, hoping to glimpse a rebound in demand, fizzled after the publication of the Conference Board's US consumer confidence index.

This has deteriorated sharply higher than expected in June, falling to its lowest level since February 2021.

Falling to 98.7 points, the index lost 4.5 points from May, as analysts s were expecting 101 points.

The assessment of the future economy, which is based on their expectations in terms of income and the job market, deteriorated further, plunging 7.3 points to 66.4 points, its lowest level since March 2013.

Wall Street ends at half mast , undermined by household confidence

Wall Street ends at half mast, undermined by household confidence

“A drop in confidence is normal with what's happening with inflation and in principle it's not necessarily bad for the market, because it means the economy is slowing down, prices should rise decrease and therefore the Fed should be less aggressive,” commented Gregori Volokhine of Meeschaert Financial Services.

“But what is more worrying is that Americans' inflation expectations remain at 8 % over twelve months, which shows that they have no confidence in the policy of the Fed,” continued Mr. Volokhin.

“With this lack of confidence in the policy of the American central bank” to curb inflation, “the Americans, who are still the investors, are in any case not going to invest now in the market”, he said. added.

For Craig Erlam, analyst at Oanda, the reading of the confidence index was “a blow” for the market.

“The significant decline in the expectations component does not bode well for the resilience of spending,” while consumption is by far the locomotive of the US economy, he said.

It noted “areas of weakness that are appearing in the economy, such as the real estate market, and perhaps consumer spending soon”. “It would be a massive setback and potentially the strongest signal yet that the United States is heading into a recession,” Erlam noted.

However, New York Fed President John Williams again assured on Tuesday that the world's largest economy should avoid a recession.

“A recession is not currently my base scenario” , Mr. Williams said on CNBC. “I think the economy is strong,” he added, predicting US GDP growth of between 1% and 1.5% for the year, though less strong than that issued by the central bank a year ago. only fifteen days (+1.7%).

Almost all S&P sectors ended in the red, starting with non-essential spending, which lost more than 4%, followed by so-called growth stocks in information technology (-3.01 %) and the communication sector (-2.92%).

Only energy kept its head above water, in the wake of the rise in crude oil prices (+2 .71%).

The big names in tech dented the Nasdaq, such as Amazon, Meta (Facebook) and Tesla, all of which fell by more than 5%. Semiconductor manufacturers also plunged like AMD (-6.24%) or Nvidia (-5.26%).

In the consumer sector, Nike tumbled almost 7% after released lackluster projections for the full year, notably due to a drop in sales in China.

Appliance maker Whirlpool lost 1.74% to 161.03 dollars, after announcing its exit from the Russian market by forging an agreement to sell its operations in the country to a Turkish manufacturer, Arcelik. This divestiture is expected to lead to a loss of $300-400 million in the second quarter for Whirlpool.