NEW YORK (dpa-AFX) – The fear of further rising key interest rates weighed heavily on the US stock exchanges on Tuesday. What proved to be a burden was that the yield on ten-year US bonds climbed to its highest level in 16 years following robust labor market data. A strong labor market could prompt the Fed to take even stronger action against high inflation – with negative consequences for the economy and thus the stock market.
The Dow Jones Industrial (Dow Jones 30 Industrial) lost 1.29 percent to 33,002.38 points, at the same level as at the beginning of June. The market-wide S&P 500 fell by 1.37 percent to 4229.45 points. The technology-heavy selection index NASDAQ 100 fell by 1.83 percent to 14,565.62 points. At the beginning of the week he had braced himself against the gloomy environment and gained ground.
The member of the US Federal Reserve, Loretta Mester, already sees the need for a further interest rate increase by the end of the year in the fight against high inflation. “I fear that we will have to raise the key interest rate again this year,” said the president of the regional central bank in Cleveland. After that, interest rates should be kept at the increased level for some time in order to bring inflation back down to the central bank’s target of two percent.
But the decision is data-dependent, Mester confirmed. Recently, US economic data was unexpectedly strong, which suggests the need for a further interest rate increase. The report on Tuesday that there were a surprising number of job vacancies in the USA in August fit into the picture. Yields then jumped again. However, high interest rates make stocks appear in a darker light compared to newly issued, interest-bearing investments.
The weakest Dow stocks were the shares of the software manufacturer Microsoft, the home improvement chain Home Depot, the credit card provider American Express and the bank Goldman Sachs, with a loss of up to 3.9 percent. They suffered particularly from the prospect of an economic slowdown as interest rates continued to rise. This makes loans and investments more expensive, which dampens economic growth.
Among the biggest losers in the S&P 500, McCormick (McCormickCo) shares fell by 8.5 percent. The spice manufacturer had missed market expectations with fresh sales and profit figures.
Otherwise, the focus on the stock market was on the pharmaceutical division. The Eli Lilly group (Eli Lilly and) wants to take over Point Biopharma (POINT Biopharma Global). Point shareholders will be offered a purchase offer of $12.50 per share in cash, it said. The transaction, which has been approved by the boards of directors of both companies, is expected to close by the end of the year. Point shares jumped nearly 85 percent to $12.36, while Lilly shares fell 2.4 percent.
The euro had meanwhile slipped to its lowest level of the current year and was most recently quoted at 1.0470 US dollars. The European Central Bank had set the reference rate at 1.0469 (previous day: 1.0530) dollars. The dollar therefore cost 0.9552 (0.9496) euros.
On the US bond market, the futures contract for ten-year bonds (T-Note Future) recently fell by 0.66 percent to 106.62 points. The yield on ten-year papers rose to 4.8 percent./la/he
— By Lutz Alexander, dpa-AFX —
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2023-10-03 20:37:38
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