POINT MARCHÉS-Les actions en Europe vues sans grand changement après les "minutes" de la Fed

Wall Street closes sharply lower, concerned about consumer reaction to inflation

The New York Stock Exchange closed sharply lower on Friday after a second consecutive sawtooth session, depressed by a slowdown in US consumers worried about inflation.

The Dow Jones lost 1.34%, the Nasdaq index fell 3.08% and the broader S&P 500 index fell 2.37%.

After a rollercoaster day on Thursday, the New York market had continued its technical bounce from the previous day at the beginning of the session.

But the boost was quickly quenched by several macroeconomic indicators, including retail sales, which were flat in September when economists had expected a 0.2% rise in a month.

“High inflation and rising interest rates have forced consumers to be more picky in their purchases,” said Oren Klachkin of Oxford Economics.

But investors mainly highlighted data from the University of Michigan consumer confidence survey.

While the headline index beat expectations in October, at 59.8 versus 58.6 in September, US consumers now see inflation at 5.1% over a year’s horizon, versus 4.6%. of September.

On average, respondents expect inflation to be 2.9% over the next 5-10 years, compared to 2.7% in September.

“What the Fed (US central bank) doesn’t want to see is an increase in inflation expectations,” said Quincy Krosby of LPL Financial. However, “they have evolved in the wrong direction.”

The acceleration of inflation expectations is a phenomenon feared by central bankers because it is likely to create an inflationary spiral that prolongs the rise in prices over time, or even aggravates it.

For this reason, “the Fed is expected to continue with its aggressive campaign” of raising interest rates, and that the path towards price stabilization will be difficult for the markets, according to Quincy Krosby.

Traders continue to recalibrate their monetary policy expectations and now see the key Fed rate at almost 5% next April.

Bond rates firmed on Friday, with the prospect of even sharper-than-expected monetary tightening. The 10-year US government bond yield stood at 4.02%, compared to 3.94% the day before.

For Art Hogan, of B. Riley Wealth Management, this increase in bond rates has contributed to cooling the equity markets.

For Maris Ogg, of Tower Bridge Advisors, investors will be especially attentive, in addition to macroeconomic data, to the forecasts of companies during the results season that has just begun.

If they are cautious “and the shares do not move or rise, it will show that we are not far from the end of the bear market” (bear market), according to the analyst.

No fewer than four major US banks released their quarterly results on Friday before the market.

JPMorgan Chase’s results (+1.66% to $111.19), above expectations for both turnover and net profit, were well received. However, CEO Jamie Dimon warned: “There are significant headwinds directly in front of us,” whether it be inflation, ongoing monetary tightening or the war in Ukraine.

Its rival Citigroup (+0.65% to 43.23 dollars), like JPMorgan Chase, took advantage of the dynamism of retail banking to offset the slowdown in investment banking activity, hurt by the tightening of credit conditions and uncertainty about the path of the economy.

Both its turnover and its net profit were reduced, but above expectations.

Another banking establishment that published its results on Friday, Wells Fargo (+1.86% to 43.17 dollars) obtained better results than expected in its billing, in part due to the rise in interest rates, which allows it to recover its margins .

As for Morgan Stanley (-5.07% to $75.30), which does not have a retail bank, suffered from the poor weather for market activities and posted a turnover well below analysts’ forecasts.

The Albertsons supermarket chain fell (-8.45% to 26.21 dollars) after the announcement of its takeover bid by its competitor Kroger, for 24.6 billion dollars, debt included.

The price of the security was almost in line with the price proposed by Kroger, that is, 34.10 dollars, from which an exceptional dividend of 6.85 dollars will be deducted, which brings the amount actually offered per share to 27.25 dollars. .

The marriage will give birth to a massive distribution giant, with almost 5,000 stores and 710,000 employees.

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