Sudden fall on Wall Street, weighed down by heavy Alphabet losses
Wall Street closed Wednesday with significant losses (Dow Jones: -0.61%; S&P500: -1.11%; Nasdaq: -1.68%; Nasdaq: -1.68%).) after the solid gains Tuesday, weighted by Alphabet’s Brutal Fallsby 7.7%, following an event on artificial intelligence organized by Google’s parent company, during which it presented its latest breakthrough in this field, Bard, an experimental chat service developed its language model for dialog applications.
In addition, investors did not take into account the latest statements from the Chairman of the Federal Reserve (Fed), Jerome Powellwho reiterated that further interest rate hikes will be neededeven if the process of “disinflation” has begun.
The solid job report last Friday, which surprised even the central banker, was a reflection of the fact that The restoration of price stability will take longer than initially expected.. “So if we continue to receive, for example, strong labor market reports or higher inflation reports, we may need to do more, and more. increase rates more than expected.” , he said Powell at a conference at the Economic Club of Washington.
“Investors seem somewhat relieved that Fed Chairman Jerome Powell is sticking to last week’s scenario, despite Friday’s jobs report indicating that… the job market remains hot. It looks like traders have become a bit more defensive in anticipation of an aggressive shift, but Powell has held back from taking the plunge,” said Craig Erlam, analyst at Oanda.
The market has expected interest rates to continue to rise. However, according to Naeem Aslam, chief market analyst at AvaTrade, expectations are no longer that the fed funds rate will be between 4.75% and 5%. ” Actually, Many believe that the Fed could end up raising the interest rate to 5.25%.“, he estimated.
“Rate hikes have a price, but the market does not yet know how long they will remain highand still evaluating cuts too soon,” said Neil Wilson of Markets.com.
In the same vein, experts at Renta 4, who believe that “equity markets do not know whether to be negative on the idea of higher rates for longer or positive on the idea of higher rates for longer long, or positive about the idea of higher rates for longer”. the resilience of the American economy and especially its labor market”.
This Wednesday they talked new fed membersas John WilliamsChairman of the Federal Reserve Bank of New York, and Christopher Wallermember of the Board of Governors.
Williams, stuck to Powell’s speech and said that if financial conditions continue to ease, EU monetary policy should continue. The Federal Reserve may be forced to raise interest rates more than expected..
“More flexible conditions could imply a higher rate. to ensure that we achieve the goals we strive to achieve.“, he added, while noting that the December projections of a federal funds rate at range of 5% to 5.5%. “likely to be accurate”.
For its part, Christopher Wallerwarned that interest rates “could be higher and for longer than some expect.”The central bank’s efforts are “beginning to bear fruit” in the form of lower inflation, although in this regard he asserted that “the job is not finished”.
” Although We have made progress in reducing inflation, but I want to say today that the job is not done.. Inflation remains too high relative to the price stability objective of the dual mandate assigned to the Federal Reserve by Congress,” he stressed during his speech at the Arkansas Agribusiness Conference. State University.
BIDEN CALLS FOR ‘ANTITRUST’ MEASURES.
On the business side, the US President Joe Bidendelivered his State of the Union address on Tuesday night, and in it he called for a antitrust legislation targeting tech giants, in order to limit their power, by directly targeting companies such as Amazon, Apple, Meta Platforms and Alphabet.The parent company of Google.
About the Online Choice and Innovation Act (AICOA), Mr. Biden urged “the passage of bipartisan legislation to strengthen antitrust enforcement and consumer protection.” prevent big online platforms from giving their own products an unfair advantage.“.
The website big tech don’t have a good time after disappointing the market with their business results and to be immersed in a wave of layoffs whose last victim was eBayeBay, which will lay off 500 employees, or 4% of its workforce, in order to create “long-term sustainable growth”. Zoom also announced 1,300 job cuts, due to “uncertainty in the global economy and its effects on customers”.
In other markets, oil West Texas rose 1.71% ($78.45) and the Brent rebounded 1.68% ($85.10). On the other hand, the euro depreciated by 0.12% ($1.0711), and the ounce of gold is up 0.11% ($1,886). Furthermore, the U.S. 10-Year Bond Yield fell to 3.632% and the bitcoin lost 1.26% ($22,892).