Bags don’t finish digesting Jerome Powell’s speech

Wall Street closed this Thursday with losses for the fourth consecutive day after the firmness of the Federal Reserve (Fed) of the United States around its monetary policy and prior to knowing the data on internal employment.

The Dow Jones industrial index fell 0.46% to 32,001.25 points, the technological Nasdaq lost 1.73% closing at 10,342.94, while the S&P 500 -which groups the 500 most stock companies in the United States- lost 1.06%, to 3,719.89 units.

Stocks closed down “less than the session’s high point, following the fourth 75 basis point hike in interest rates and comments from the Fed,” analysts at consultancy Schwab said.

It was the sixth consecutive increase in rates ordered by the Fed since March, when they were between 0 and 0.25%, to stimulate the economy after the crisis caused by the coronavirus. Now, rates are between 3.75% and 4%, the highest level in 15 years.

Fed Chairman Jerome Powell said after the announcement that it will take “time” before rate hikes can contain inflation, and that this will mean a cooling of the economy.

“Simply put, he hit the market with a stick,” said Jack Ablin, an analyst at Cresset Capital.

Although traders remain divided between the odds of a 50 and 75 basis point hike in December, the top Fed funds rate is seen rising to 5% or more next year, versus a previous estimate from the 4.50-4.75 percent.

“Hope for a Fed inflection” in its monetary policy has faded, Briefing’s Patrick O’Hare said.

Meanwhile, bond rates also took an upward slope, although they moderated their advance at the end of the session. The 10-year Treasury bond rate stood at 4.12% against 4.19% in the morning and 4.04% the previous day.

Also, weekly unemployment benefits were reduced by 217,000 last week, showing a still dynamic labor market, something that the Fed believes may stimulate inflation.

The Labor Department will release employment data for October on Friday. Investors will follow the report, which will be crucial for the market to gauge whether the Fed’s rate hikes cooled the economy.

US service sector activity growth slowed more than expected in October, according to the ISM index, which fell 2.3 percentage points from September to 54.4 percent.

In the last four days, the index that has lost the most is the Nasdaq with a drop of 6.84%, followed by the S&P 500 that falls 4.64% and the Dow Jones that falls 2.62 percent. In the year, the Nasdaq accumulates a loss of 33.89%, while the S&P 500 and the Dow Jones drop 21.95 and 11.94%, respectively.

BMV falls 1.28%

In Mexico, the Price and Quotation Index (IPC) of the Mexican Stock Exchange fell 1.28% in the session, closing at 50,215.87 units, this one day after the Day of the Dead holiday. The FTSE-Biva index of the Institutional Stock Exchange (Biva) fell 1.10%, to 1,050.29 points. Gabriela Siller, director of analysis at Banco Base, assured that this Thursday’s losses “are largely attributed to a delayed effect of the Fed’s decision and Powell’s press conference.”

So far this year, the Mexican stock market has had fewer losses than the US stock markets. Until this Thursday, the IPC accumulates a fall of 4.52%, while the FTSE-Biva falls 3.56 percent.

Asur fell 5.6%

Technological companies and airports lead falls in the Stock Market

After the fourth consecutive increase of 75 basis points in the Fed’s interest rate, losses in the technology sector stood out in the US stock markets, while in Mexico the ones that fell the most were airports and cement companies.

Within the Dow Jones index, the companies that lost the most were Apple, whose shares plunged 4.24% on Thursday to $138.88, while shares of Microsoft fell 2.66% to $214.25.

The losses of Visa also stood out, its shares fell 3.09%, American Express lost 2.92%, and Walt Disney fell 2.52 percent.

Another red day for technology

Of the 11 sectors represented in the S&P 500, technology (which includes Apple) and communication services (made up of Alphabet, Meta and Netflix) were the ones that fell the most on the trading day, with declines of 3 and 2.83% , respectively.

Losses in the US market moderated thanks to advances in large industrial companies, such as aeronautics Boeing (+6.34%) and heavy machinery manufacturer Caterpillar (+2.20%).

While the winners were energy, with a rise of 2.04%; followed by industrial, with 1.04% and materials, with 0.77 percent.

In Mexico, Cemex and the airport groups led the losses within the S&P/BMV IPC (Index of Prices and Quotations) of the Mexican Stock Exchange (BMV), one day after the Day of the Dead holiday.

The titles of Aeropuertos del Sureste lost 5.69%, at 437.19 pesos each; those of Cemex stumbled 4.74%, to 7.43 pesos per share and those of Grupo Aeroportuario del Pacífico fell 4.50%, to 300.46 pesos per share.

termometro.economico@eleconomista.mx