Worst session since 2020 for Wall Street, the Nasdaq loses nearly 5%

Posted 05 May, 2022

The New York Stock Exchange signed its worst session since 2020 on Thursday, investors taking the opposite view from the rebound of the previous day after a second reading of the Fed's announcements on Wednesday.

The Nasdaq recorded the third-largest point loss in its history, after the two black sessions on March 12 and 16, 2020, at the start of the coronavirus pandemic.

The tech-heavy index tumbled 4.99%, while the Dow Jones fell 3.12% and the broader S&P 500 index fell 3.56%.

"We had one of the best sessions yesterday, and one of the worst today," said Angelo Kourkafas of Edward Jones.

After being enthused on Wednesday by comments by US central bank (Fed) Chairman Jerome Powell, who had ruled out even more monetary policy tightening and a 0.75 percentage point hike in his next meeting, the market regained its senses on Thursday.

"The fact (that the US central bank) ruled out a 0.75 percentage point hike hasn't really changed the fact that the economy is slowing and the Fed is going to tighten monetary policy at a high pace," he said. explained Angelo Kourkafas.

"People started to think a little more about the Fed and its communication and realized things weren't going to get better," said Maris Ogg of Tower Bridge Advisors.

For her, Thursday's movement is also explained by profit-taking, which followed the jump the day before, as well as by the surge in bond rates.

"That's what scared the stock market," she said.

The yield on 10-year US government bonds soared above 3.10% for the first time since November 2018.

As usual, the first to come under the fire of investors were technology and growth stocks, which now weigh the heaviest on Wall Street.

Apple (-5.57%), Microsoft (-4.36%), Tesla (-8.33%) or Amazon (-7.56%) were roughed up. The latter is down nearly 20% since the publication of its results a week ago and has erased more than 280 billion in market valuation.

The New York market was also taken the wrong way by some mixed corporate results, accompanied by very measured, even pessimistic forecasts.

"Companies with the best numbers usually publish first" during earnings season, says Maris Ogg. "Bad ones come later," which is right now, she says.

Wall Street notably ticked over a series of publications from e-commerce sites deemed to be without panache, even worrying.

The online sales site eBay suffered from lower than analysts' projections for the second quarter (-11.72% to 48.04 dollars), despite sales and earnings above the Wall Street consensus.

The e-commerce platform Shopify also collapsed (-14.91% to 413.09 dollars), after the publication of a turnover much lower than expected, as well as a significantly higher loss.

Twitter benefited (+ 2.65% to 50.36 dollars) from the communication of Elon Musk, who managed to raise seven billion dollars from investors to finance the takeover of the platform.

This sum, collected from funds and wealthy investors such as the entrepreneur Larry Ellison or the Saudi prince Al-Walid bin Talal, will make it possible to reduce the amount borrowed from banks for the operation.

Snap (-9.58%), Meta (parent company of Instagram, -6.77%) or Alphabet (parent company of YouTube, -4.76%) suffered after their fiercest competitor, TikTok, revealed Wednesday that it was going to set up an ad revenue sharing system with the platform's most popular creators.

"The market will continue to be volatile and seesaw until we have confirmation that inflationary pressures subside and bond rates with them," said Angelo Kourkafas.

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