NEW YORK (awp international) – The US leading index Dow Jones Industrial extended its recent losses on Wednesday. Recession fears increased after the Labor Department reported surprisingly high consumer prices for June. The development speaks in favor of further significant interest rate hikes by the US Federal Reserve to combat inflation. Even an interest rate hike of one percentage point, as undertaken by Canada’s central bank in the middle of the week, currently seems possible. However, the figures did not change the fundamental expectation that the Fed would be able to quickly and resolutely continue along the course it had started.
Against this background, the stock market was able to absorb the inflation figures relatively well overall. In the end, the Dow fell only 0.67 percent to 30,772.79 points after losing around 1.5 percent in early trading. After brief excursions into the profit zone, the market-wide S&P 500 ultimately fell by 0.45 percent to 3801.78 points. The technology selection index Nasdaq 100 lost 0.14 percent to 11,728.53 points.
Consumer prices rose 9.1 percent year-on-year in June. It is the highest value for over 40 years. This increases the pressure on the Fed to raise interest rates sharply. Higher interest rates, however, make consumer credit and corporate investments more expensive and can thus significantly dampen economic activity.
“The June data on consumer prices have not alleviated the Fed’s inflation concerns,” wrote Johannes Mayr, chief economist at wealth manager Eyb & Wallwit. In addition, worries about a recession increased on the market. Because the pressure on the economy has already increased significantly and will continue to increase – driven by the considerable loss of purchasing power and the already significant tightening of financing conditions.
Looking at the individual values, the airline stocks, which were still very strong the day before, came under significant pressure. Investors reacted angrily to the fact that Delta Air Lines’ second-quarter earnings were worse than expected and expects high operating costs for the rest of the year. Because on Tuesday, American Airlines had created a good mood in the sector with robust business figures. Now Delta Air Lines has fallen 4.5 percent among the weakest stocks in the S&P 500. American Airlines shares gave up some of the day’s gains, falling 3.1 percent.
Twitter is asking tech billionaire Elon Musk in court to implement the agreed takeover of the online service. The company filed a lawsuit in the state of Delaware. The competent court can order the completion of a takeover, which Twitter also expressly demands. Shares rose nearly 8 percent.
Among the other tech values, the Netflix papers increased by a good one percent. The company had chosen Microsoft as its technology partner for the future version of the streaming service with advertisements. In April, Netflix announced that it would develop a cheaper version with advertising in view of the declining number of customers. Microsoft lost 0.4 percent.
The euro was last listed at 1.0056 US dollars. In the course of trading, the common currency was worth less than a dollar for the first time in about twenty years given the high inflation in the USA. The European Central Bank set the reference rate at 1.0067 (Tuesday: 1.0042) dollars. The dollar thus cost 0.9933 (0.9958) euros.
On the US bond market, the futures contract for ten-year Treasuries (T-Note Future) rose by 0.20 percent to 118.89 points and thus benefited from ongoing recession concerns. In return, the yield on ten-year government bonds fell to 2.92 percent./la/he
— By Lutz Alexander, dpa-AFX —
–
