The New York Stock Exchange opens lower, digests its recent wave of increases

New York (AFP) – The New York Stock Exchange was down Thursday, catching its breath after more than two weeks of almost uninterrupted gains, between disappointing macroeconomic indicators and falling oil prices.

At around 2.15pm GMT, the Dow Jones was down 0.57%, the technology-dominated Nasdaq was down 0.41% and the S&P 500 was down 0.36%.

“It’s the end of the month, the end of the quarter, and we’ve just had a strong movement over the past two weeks,” commented Adam Sarhan, founder and managing director of 50 Park Investments. “So right now it looks like the market is digesting. It’s perfectly normal and even healthy.”

On the macroeconomic side, investors had widely anticipated the acceleration of inflation in March, illustrated by the publication on Thursday of the PCE index, which showed a 6.4% rise in prices over one year, in line with expectations.

On the other hand, economists were surprised by the slowdown in consumption and the increase in disposable income in February in the United States.

“High prices, falling real incomes (adjusted for inflation) and disposable income, as well as the decline in available savings, are unfavorable to households, even if the job market continues to grow” , put forward, in a note, Rubeela Farooqi, chief economist of the firm High Frequency Economics.

Overall, “ongoing growth concerns could be a factor” in Wall Street’s pullback, according to Briefing.com’s Patrick O’Hare, who cited China’s poor PMI activity indices for March.

The index for the services sector even fell to its lowest level since February 2020, the start of the coronavirus pandemic.

On the geopolitical front, investors frankly renounced the optimism born on Tuesday of what appeared to be a diplomatic breakthrough on Ukraine but was not followed by concrete developments.

According to its secretary general, Jens Stoltenberg, NATO is expecting new Russian offensives in Ukraine and does not believe in even a partial withdrawal.

The VIX index, which measures market volatility, rose slightly on Thursday.

A good part of the values ​​which had benefited from the cavalcade of the last two weeks posted a marked decline, like the manufacturer of semiconductors AMD (-4.62%), Uber (-2.95%) or of the Coinbase cryptocurrency exchange platform (-1.92%).

On the other hand, cruise passengers stayed the course, still supported by a new opinion from the Centers for Disease Prevention and Control (CDC), the main American health agency, which no longer recommends avoiding cruises to avoid contracting the coronavirus.

Carnival (+1.58%), Norwegian (+1.97%) and Royal Caribbean (+1.72%) all started the session in the green.

“If (market) digestion results in massive selling,” warned Adam Sarhan, “then it won’t be digestion, but a resumption of the downtrend” that had rocked the New York market since the start of the year, before the improvement of the last two weeks.

“On the other hand, if it is contained, with low volatility and reduced volumes, it would show that buyers are still in control,” added the manager.

On the rating HP was penalized (-6.62% to 36.27 dollars), as was Dell, after the lowering of the recommendation of Morgan Stanley, which foresees difficulties in the PC market due to the uncertainty on the economic context.

The Walgreens pharmacy chain did not benefit (-6.55% to 44.35 dollars) from quarterly results above expectations, supported by vaccinations against Covid-19 and tests, in its branches or in home kits.

Several oil companies were pulling back as the market awaits the announcement by US President Joe Biden of a ramp-up in the use of strategic black gold reserves.

According to several American media, the head of state plans to draw one million barrels a day for six months, or about 180 million barrels. The information caused crude oil prices to fall by more than 5%.

ExxonMobil (-0.49%) and Chevron (-0.69%) were both in the red.

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