Dow rally comes to a halt
Ahead of the publication of the new labor market report, investors on Wall Street are keeping a low profile. Government bonds are in demand and their yields are falling as a result. Shares in technology giants such as Apple and Tesla rise, while the Dow closes in the red.
The guesswork surrounding the Fed's future monetary policy is making Wall Street investors nervous. The Dow Jones index of blue chips closed 0.2 percent lower at 36,124 points on Tuesday. By contrast, the technology-heavy Nasdaq advanced 0.3 percent to 14,229 points. The broad-based S&P 500 lost 0.1 percent to 4567 points.
Investors are hoping that the economic data due later in the week will provide clues as to the roadmap for the Fed's interest rate cuts. The monetary authorities are attempting to fight inflation and cool the hot labor market with higher interest rates without choking off the economy. A survey published on Tuesday by the US Department of Labor did show signs of a slowdown. However, analysts were cautious. "The labor market is weaker, but not so weak as to require a rate cut by the Fed or threaten a recession," said Paul Nolte, consultant and strategist at asset manager Murphy & Sylvest. Investors are now eagerly awaiting the US government's official labor market figures due on Friday.
Hopes of falling interest rates in the coming year have led investors to increasingly turn to government bonds again. The yield on ten-year US bonds fell to 4.180%, its lowest level in three months, in response to the rising price. On Monday, they had yielded 4.286 percent.
The fall in yields supported the shares of technology giants such as Apple, Tesla and Nvidia, which gained between 1.3 and 2.3 percent. Technology stocks rise when yields fall because investors tend to shift their investments from low-yielding bonds into potentially higher-yielding stocks of high-growth companies.
On the oil market, prices turned negative again after jumping by a good one percent. North Sea Brent crude oil and light US WTI crude fell by a good half a percent each to USD 77.54 and USD 72.63 per barrel (159 liters) respectively. Russian Deputy Prime Minister Alexander Novak had announced that the oil cartel Opec+ was prepared to extend its production cuts in the first quarter of 2024. However, uncertainty about global fuel demand outweighed supply fears. The latest Opec+ decision on production volumes had made investors skeptical on Monday. As the agreed supply cuts are voluntary, analysts question whether producers will implement them in full or not.
Procter & Gamble has to spend billions
Among the individual stocks, Procter & Gamble came under pressure. Shares in the consumer goods multinational fell by a good three percent. The company is planning a restructuring program in certain markets due to the strong dollar and is facing expenditure in the billions.
The US-listed shares of Chinese companies also flew out of the portfolios. The shares of Alibaba, Bilibili and JD.Com each lost between one and just under two percent. The People's Republic is threatened with a lower credit rating from the US rating agency Moody's. The planned release date for a new video game from Take-Two subsidiary Rockstar Games did not go down well with investors. The software developer's shares lost 0.5 percent. The release of the sixth installment of the popular Grand Theft Auto (GTA) series is planned for 2025, Rockstar Games indicated in the first official trailer. "The problem is, there is still no more specific release date," said Andrew Uerkwitz, analyst at US investment bank Jefferies. "This is fueling fears of a delay until Christmas 2025." (Report by Zuzanna Szymanska. If you have any questions, please contact our editorial team at [email protected] (for politics and the economy) or [email protected] (for companies and markets).) 2023-12-05T21:30:40.000Z
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Despite the positive performance of tech giants like Apple and Tesla, the overall trend on Wall Street remains bearish, as evidenced by the Dow Jones index closing 0.2% lower at 36,124 points. The uncertainty surrounding the Federal Reserve's monetary policy and potential interest rate cuts is causing jitters among investors, who are also keeping a close eye on the upcoming labor market report for clues.
The fall in government bond yields, driven by hopes of future interest rate cuts, is positively impacting the share prices of tech giants such as Apple, Tesla, and Nvidia. This trend stems from investors shifting their investments from low-yielding bonds into potentially higher-yielding stocks of high-growth companies.
Source: www.ntv.de
