new York Fear of rapid rate hikes by the US Federal Reserve continues to have investors on Wall Street firmly in its grip. Mixed corporate balance sheets also weighed on sentiment on Tuesday. The US blue chip index Dow Jones and the broad S&P 500 fell 1.2 percent to 33,961 points and down two percent to 4,322 points on Tuesday. The tech-heavy Nasdaq slipped 3 percent. According to experts, higher interest rates will devalue the future profits of these high-growth companies.
“We live in a world where most market participants have never seen a rate hike cycle,” said equity trader Keith Temperton of brokerage house Forte Securities. “All they know is a Fed pumping money into the markets. So this is a shock now.”
The stock market is certain that the Fed will announce a rate hike for March on Wednesday. Some investors even expect an increase of half a percentage point instead of a quarter.
Company balance sheets are generally good, said Dan Eye, chief analyst at asset manager Fort Pitt. “But they’re more in line with expectations, rather than significantly above as in previous quarters.”
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The dollar index, which tracks rates against major currencies, rose 0.2 percent. In addition to the approaching interest rate hikes against the background of the Ukraine crisis, it benefited from its status as a “safe haven”.
The fear of delivery failures if this conflict escalated was also reflected in the price of oil. The US variety WTI rose in price by 2.2 percent to $85.14 per barrel (159 liters).
General Electric’s numbers disappoint
General Electric was one of the biggest losers on the US stock market with a price loss of almost seven percent. The Siemens rival’s quarterly sales of $20.3 billion fell short of market expectations. The same applies to the profit target for 2022 of $2.80 to $3.50 per share, complained analyst Gautam Khanna from asset manager Cowen.
American Express, on the other hand, increased by 6.6 percent. The credit card provider’s quarterly profit significantly exceeded expectations, praised analyst John Hecht from the investment bank Jefferies. The same applies to the sales targets for 2022. Only the targeted profit is a bit disappointing.
Biontech stocks listed in the USA were also in demand, increasing in price by 5.4 percent. The Mainz-based company is beginning the first clinical studies with a coronavirus vaccine specially adapted for the omicron variant. Subject to regulatory approval, the serum could launch as early as March. The titles of the Biontech partner Pfizer increased 1.7 percent.
>> Read here our analysis: The debate about US monetary policy is becoming increasingly heated. A conversation between economists Krugman and Summers also provides information.
Look at other individual values
American Express: Record card spending helped the company post better-than-expected fourth-quarter earnings and sales. Earnings came in at $2.18 per share, well above the consensus estimate of $1.87. The stock rose nearly 7 percent.
IBM: The company beat estimates by five cents a share and posted quarterly earnings of $3.35 a share. Revenue also beat expectations, reflecting the strength of IBM’s cloud computing business. IBM shares saw some volatility in after-hours trading after the company declined to provide earnings guidance. Shares are up 3.6 percent on Tuesday.
Aerojet: Fading hopes of a takeover by Lockheed Martin bring Aerojet Rocketdyne its biggest share price drop in 20 years. Shares in the rocket engine maker fell 19 percent on Wall Street to a 14-month low of $36.50. The US competition authority FTC plans to sue the $4.4 billion deal over antitrust concerns.
PetMed Express: The company missed consensus estimates by 9 cents with quarterly earnings of 21 cents per share. The pet products maker’s sales also fell short of analysts’ forecasts. However, the share still rose by 6.7 percent.
More: Chart technicians see further downside risks