NEW YORK (dpa-AFX) – Continuing increases in yields on the bond market and the associated concerns about business development once again caused problems for tech stocks on Friday. The leading US index, the Dow Jones Industrial (Dow Jones 30 Industrial), recovered somewhat from its recent losses.
The Dow rose 0.40 percent to 34,721.12 points. On a weekly basis, however, this results in a minus of 0.28 percent. The broader S&P 500 was down 0.27 percent on Friday to 4488.28 points. The tech-heavy NASDAQ 100 fell 1.41 percent to 14,327.26 points. His weekly minus amounts to 3.6 percent.
The bond markets and the stock exchanges are currently dominated by monetary policy in particular. A series of rate hikes is expected from the Federal Reserve this year to combat high inflation. In addition, the Fed wants to start reducing its trillion-dollar balance sheet as soon as possible.
Both developments are causing interest rates to rise sharply on the capital markets. Risky assets like stocks suffer as fixed income bonds become increasingly attractive. In addition, there are fears that sharply rising interest rates will make loans significantly more expensive for companies and consumers, thereby slowing down economic growth.
The Swiss bank Credit Suisse advises equities despite rising inflation and tighter monetary policy. “The world economy should continue to grow in the coming months,” was the reasoning. In addition, investors have so far been “positioned cautiously”, which means upside potential, at least in the short term.
At the top of the Dow, Home Depot shares rose 2.8 percent. The chief financial officer of the hardware store chain made a positive statement at an analysts’ conference, said stockbrokers. Accordingly, the investments made between 2018 and 2020 allowed the company to increase its market share more than originally expected.
Bank shares benefited from the prospect of rising interest rates. Goldman Sachs and JPMorgan (JPMorgan ChaseCo) rose by around two percent each. Higher interest rates would strengthen the earning power of banks. Goldman Sachs and a number of other banks will report results on Thursday next week.
Analyst comments also provided some movement. According to a skeptical study by Credit Suisse, shares in Alcoa (Arconic) fell by more than two percent. The aluminum producer is struggling with inflationary pressures and at the same time investments should pick up to meet carbon reduction targets, analyst Curt Woodworth wrote. In addition, aluminum prices are likely to peak soon and then fall again.
The euro closed at $1.0874 on Wall Street. The European Central Bank had set the reference rate at 1.0861 (Thursday: 1.0916) dollars. The dollar thus cost 0.9207 (0.9161) euros.
Government bonds remained under pressure on the US bond market. The futures contract for trend-setting ten-year Treasuries (T-Note future) fell 0.30 percent to 120.19 points. The yield on ten-year government bonds was 2.71 percent. This is the highest level in over three years./la/he
— By Lutz Alexander, dpa-AFX —
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