Frankfort, New York Rate hike fears and disappointing corporate balance sheets are weighing on Wall Street. After the long weekend, the leading indices Dow Jones, Nasdaq and S&P 500 each fell by around 1.5 percent at the opening on Tuesday.
Investors feared faster rate hikes by the US Federal Reserve because of persistently high inflation, said Neil Wilson, chief analyst at online broker Markets.com. Even an increase of half a percentage point can no longer be completely ruled out. “If you read the recent comments by the US Federal Reserve and their boss Jerome Powell, according to the Fed the greatest threat to the economy and thus to the labor market is inflation.”
Against this background, investors threw government bonds out of their portfolios. That pushed the yield on the benchmark 10-year Treasury to a two-year high of 1.855 percent. The two-year stocks, which were also observed, returned more than one percent for the first time since the beginning of 2020.
In terms of stock values, Goldman Sachs was one of the losers, falling 6.5 percent. Analyst Daniel Fannon from the investment bank Jefferies complained that the money house’s profit fell short of expectations. Reasons for this include higher costs and provisions for bad loans.
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Microsoft is about to make a mega takeover. The software group wants to buy the computer and video game company Activision Blizzard for a total of 68.7 billion dollars. It would be the biggest deal in the industry ever. Microsoft shares fell 1.4 percent while Activision Blizzard’s stock soared 30 percent.
Microsoft is offering $95 per Activision Blizzard share, a 45 percent premium to Friday’s closing price. The producer of “Call of Duty” is currently the focus of a sexism scandal. In the course of investigations, 37 employees were laid off, as Activision Blizzard announced on Monday. 44 more would have received a written warning.
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Alibaba: The stock fell more than four percent. According to a media report, the Biden administration is to review the China-based company’s cloud unit to see if it poses a risk to US national security. The investigation is said to focus on how e-commerce giant Alibaba stores US customers’ data.
Citrix Systems: According to a media report, Elliott Investment Management and Vista Equity Partners are said to be in advanced talks about buying the software company. Citrix stock is up 4.7 percent.
gap: The stock fell 7 percent after US bank Morgan Stanley downgraded the clothing retailer’s stock to underweight from balance.
Unilever: The consumer goods maker has submitted a $68 billion bid for Glaxo-Smithkline’s (GSK) consumer health business. As a result, Unilever shares fell by more than two percent. This offer was the third to take over this unit. So far, every offer has been rejected as undervalued. However, Glaxo-Smithkline shares are also falling by around one percent.
Peloton: The company will begin charging for setup and delivery of its bikes and treadmills starting January 31, previously included in the retail price. Peloton will charge $250 for setup and delivery of its bikes and $350 for its treadmills. The stock fell 4.2 percent.
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