Frankfort, New York The US stock exchanges closed in the red on Wednesday after a roller coaster ride. All three market barometers fell. The speculation about faster rate hikes by the US Federal Reserve unsettled investors, said stockbrokers. Meanwhile, investors’ delight in strong corporate balance sheets had boosted Wall Street.
The US blue chip index Dow Jones and the broader S&P 500 were up slightly on Wednesday, as was the tech-heavy Nasdaq before sentiment turned in the evening. The Dow Jones closed one percent lower at 35,028 points. The tech-heavy Nasdaq fell 1.2 percent to 14,340 points. The broad S&P 500 lost one percent to 4532 points.
Craig Erlam, market analyst at brokerage firm Oanda, pointed out that the issues of inflation and interest rate hikes, which had sent share prices plummeting over the past few days, are not over yet. The prospect of a quick end to the US Federal Reserve’s cash injections and aggressive rate hikes are making investors nervous. “We are talking about markets that have become accustomed to extensive central bank support.”
Bond yields and oil prices continue to rise
Against this background, the selling pressure on the bond market continued. This pushed yields on the benchmark 10-year Treasury to a two-year high of 1.902 percent at one point. In their slipstream, their German counterparts returned more than zero percent for the first time in almost three years.
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The inflationary pressure from rising energy prices remained high. The US oil variety WTI temporarily increased by almost three percent and at $87.91 per barrel (159 liters) was more expensive than it was more than seven years ago. “Supply has been tight for some time as Opec+ countries are not meeting their production quotas,” said ActivTrades analyst Ricardo Evangelista. The situation is exacerbated by the recent attack on tankers in Abu Dhabi, tensions between Russia and Ukraine and the failure of an important pipeline from Iraq to the Mediterranean.
Bank of America and Morgan Stanley on the up
Among the winners in the US stock market were Bank of America and Morgan Stanley, with price gains of 0.4 and 1.8 percent respectively. After the disappointing results of the competition, the two financial institutions surprised positively. Bank of America benefited from strong growth in lending and merger activity. Morgan Stanley made good money from takeovers and wealth management.
Procter & Gamble also made happy faces with higher sales forecasts. Analyst Kevin Grundy from the investment bank Jefferies praised the fact that the profit targets, which were confirmed despite higher costs and adverse exchange rate effects, were also positive. The papers of the “Lenor” provider increased in price by 3.4 percent.
Shares in United Health, which rose 0.3 percent, were also in demand. The largest US health insurer expects continued strong demand for its “Medicare Advantage” offering. That is a relief, said stockbrokers. Some feared weaker customer growth due to growing competition.
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UnitedHealth: The health insurer generated adjusted earnings of $4.48 per share in the fourth quarter, up 17 cents from estimates. The company’s earnings also exceeded forecasts. UnitedHealth saw particular strength through its Optum unit’s drug management business. The stock rose 0.33 percent.
Procter & Gamble: The stock rose 3.4 percent. The company had beaten estimates for second-quarter earnings and raised its organic growth outlook. P&G beat estimates by a penny with earnings of $1.66 a share as consumers reacted calmly to price hikes for the company’s household products.
SoFi Technologies: The papers climbed 13.68 percent because the fintech company had received regulatory approval to become a bank holding company.
Tegna: The company is about to finalize a $9 billion deal. According to a report by the New York Post, the private equity firms Apollo Global Management and Standard General want to take over for this price. The shares of the operator of television stations rose by 5.27 percent.
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