Frankfort, New York Stockbrokers needed strong nerves on Monday. The threat of curbing the flow of money from the US central bank and the worsening crisis in Ukraine initially caused severe losses on the New York stock market. The Dow Jones index lost more than 1,000 points at times on Monday, but finally closed 0.29 percent higher at 34,364 points. The market-wide S&P also ended just in the profit zone at 4410 points and was thus 0.27 percent stronger.
The index of the Nasdaq technology exchange initially fell by 4.9 percent to 13,094 points, but also turned around at the end of trading and closed half a percent up at 14,509 points.
Market participants have to adapt to a new phase that is associated with more volatility. “If it was just Ukraine alone, people would ignore it, but that’s the final straw today,” said Gary Black, managing partner of Future Fund Active ETF (FFND). “At the same time, people worry that the Fed is making policy blunders, and that just adds uncertainty.”
With the US Federal Reserve’s interest rate decision due on Wednesday, stock market traders will be eyeing closely how concerned the Fed is about rising inflation and how aggressively it will try to contain it. The money market has already fully priced in a 25 basis point rate hike in March, as well as three more rate hikes by the end of the year.
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“The excesses that we saw in 2020 and 2021 are over for now,” believes short seller Jim Chanos of Kynikos Associates. Investors would have to be prepared “that the Fed is now much more concerned about the economy than about the markets,” he said on the US stock exchange broadcaster CNBC. That would be a clear shift in strategy. After all, the US Federal Reserve had repeatedly supported the stock markets during the pandemic and set new records. However, Chanos warns against too much panic. His fund relies on rising prices in the major indices. He would only bet on falling prices for stocks that are extremely highly valued.
Art Cashin from UBS believes that the high volatility on the markets would not leave Fed Chair Jerome Powell indifferent either. He said he couldn’t give in too much because he had to fight high inflation. “But I think Powell and the other Feds have gotten nervous. That could mean that they will take their foot off the accelerator a little at their meeting on Wednesday.” It is quite possible that hopes of less aggressive signals from the Fed calmed investors somewhat at the close of trading.
Tuttle Capital Management’s Matthew Tuttle expects volatility to continue in the coming weeks. “The current market environment has been created by monetary policy. Assets need to be revalued now that monetary policy is changing. Unfortunately, it’s not always that easy on Wall Street,” warns Matthew Tuttle of Tuttle Capital Management. “In addition, a number of investors, including many small investors, have not yet fully grasped that the market environment will change.”
Ukraine crisis weighs on markets
Rising tensions between Russia and the West are also worrying investors. The danger of war has never been so great, said Kremlin spokesman Dmitry Peskov in Moscow. According to Secretary General Jens Stoltenberg, the armed forces of the NATO countries are on alert.
The Ukraine issue will weigh on the markets for the foreseeable future, “until there is some kind of solution and more clarity on how things will turn out,” said Darren Schuringa, head of asset manager ASYMmetric ETFs.
Investors have fled Russian stocks, which have tumbled the most since the March 2020 coronavirus-related stock market crash. Moscow’s leading index fell by almost six percent. The Russian currency also came under pressure. In return, the dollar was trading at 78.67 rubles, the highest since November 2020.
Cryptocurrencies also flew out of the depots. Bitcoin and Ether slipped by up to 15 percent at times and were quoted at $ 33,584 and $ 2,220 at the level of half a year ago. Following the US indices, however, Bitcoin also turned positive again and was over $37,000 shortly after the close of trading in New York. Burdened by a stronger dollar, the price of the North Sea oil Brent fell by more than two percent over the course of the day and was around one percent lower at the close of trading.
The “anti-crisis currency” gold rose in price by 0.5 percent to $1,843 per troy ounce (31.1 grams). Bonds were also in demand, with the yield on 10-year US Treasuries temporarily falling to 1.726 percent – at the close it was back at 1.776 percent.
US technology stocks lost particularly heavily over the course of the day. With a minus of around eight percent, Tesla led this list of losers at times. At the end of trading, the titles of the electric car manufacturer were still around 1.3 percent in the red. Valuations are high for many tech stocks, but if earnings don’t justify it, there’s room for continued and further corrections, Schuringa said.
Look at other individual values
Kohl’s: The prospect of a bidding war for Kohl’s brought the department store chain its biggest price jump in almost two years. Shares rose more than 36 percent on Wall Street to $63.71. According to insiders, financial investor Sycamore wants to outbid Acadia’s offer of $64 per share. In the room is an offer of 65 dollars per share or a total of around nine billion dollars. Kohl’s confirmed expressions of interest but did not provide names or details.
US stock market expert Koch: “Tech stocks are really going downhill”
Peloton: Activist investor Blackwells Capital has called on the fitness equipment maker to fire its CEO and seek a sale of the company. The company’s stock is down more than 80 percent from its all-time high. After a rollercoaster ride, Peloton was up 9.7 percent at the close.
Gamestop and AMC: In the downward spiral of the stock exchanges, speculative objects, which are particularly popular with small investors, are also slipping. Gamestop and AMC Entertainment’s stocks fell by up to 12 percent each, but ended trading up 5.8 percent and 7.4 percent, respectively. The prospect of rising interest rates is taking the wind out of gamblers’ sails, said Thomas Hayes, a managing director at Great Hill Capital. Last year, Gamestop was up 600 percent, AMC was up more than 1100 percent.
Coinbase: Shares of the cryptocurrency trading platform are down as much as 9.7 percent, reflecting the cryptocurrency’s downtrend over the weekend and into the week. Bitcoin reached its lowest level since July last year. At the close of trading, the minus was only 0.25 percent.
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