Trading day ends with a wave of selling
After the recent record-breaking run on Wall Street, nervousness is spreading. At the end of the trading day, investors take profits - and let the most important US indices slide significantly into the red. Google parent company Alphabet defies the downward trend.
The US stock markets closed in the red on Wednesday after a largely positive performance. Market participants pointed to an abrupt wave of selling in late trading. Prior to this, the rally in interest rate hopes on the US stock markets had already largely fizzled out. The Dow Jones index of blue chips closed 1.3 percent lower at 37,082 points. The technology-heavy Nasdaq fell 1.5 percent to 14,777 points. The broad-based S&P 500 lost 1.5 percent to 4698 points.
Wall Street recorded a strong rise last week after the US Federal Reserve held out the prospect of an easing of monetary policy in the coming year. According to experts, this was already largely priced in during the recent rally, which is why the rally was rather short-lived. "It started with the interest rate hopes back in October, and it really took off in December," said Daniela Hathorn, analyst at the trading platform Capital.com. "Now investors are starting to question the sustainability of another rally."
Some experts also pointed out that market expectations regarding interest rate cuts could be exaggerated. Almost 80 percent of market participants currently expect an initial interest rate cut at the Fed meeting in March. Falling interest rates from May are considered almost certain. This means five to six interest rate cuts by the end of the year. "I don't believe that the economy is weakening so much that five interest rate cuts will be needed next year," commented Pavlik. "I assume that there will be two rate cuts in 2024. After that, the Fed will take a break again."
Uncertainty regarding the exact timetable for interest rate cuts supported the US currency. The dollar index was up slightly at 102.354 points. The euro , on the other hand, lost 0.3 percent to 1.0952 dollars.
Among the individual stocks, FedEx came under heavy pressure. The shares of the Deutsche Post rival slipped by a good twelve percent following a lowered forecast. A pessimistic outlook also weighed on General Mills shares. The shares of the Cheerios breakfast cereal provider fell by 3.6 percent. The company expects an organic decline in sales of up to one percent or stagnation in 2024. It had previously assumed growth of between three and four percent. Analysts had expected an average increase of 2.4 percent. The background to this was a fall in demand following cost-related price increases.
In contrast, Alphabet shares were in demand, rising by 1.2 percent. A media report on the Google parent company's plans to restructure its advertising business put investors in a good mood. The group wants to consolidate a large part of the 30,000-strong department, reported the news portal "The Information". This could mean that some of the staff will be made redundant and some reassigned to other departments.
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Despite the Dow Jones index and other major US indices sliding significantly due to profit-taking and selling pressure at the end of the trading day, Google parent company Alphabet managed to defy the downward trend, with its share prices increasing by 1.2%. In the context of stock trading, Wall Street's rally in late November and December, which was driven by hopes of easing monetary policy from the US Federal Reserve, had already started to wane before the abrupt wave of selling.
Source: www.ntv.de
