Dusseldorf A sharp rise in US government bond yields scared Wall Street investors on Thursday. The Dow Jones Industrial Average fell about 600 points to close 1.8% in the red at 31,402 points. The S & P-500 market completed trading 2.4% weaker at 3829 meters.
The Nasdaq Composite technology index fell even further, falling 3.5% to 13,119 points – the highest daily loss since last October. Technology giants Apple, Alphabet, Amazon and Facebook each lost more than 3 percent, while Microsoft lost 2.4 percent. On a weekly basis, the Nasdaq Composite has already lost more than five percent.
Investors are currently redeeming stocks that have done particularly well in recent months, said Naeem Aslam, chief market analyst at Avatrade. They transferred their money to those industries that are relatively cheap.
The impetus for Wall Street failure was a sell-off in bond markets. In return, the yield on 10-year US government bonds rose to 1.614%, the highest level since February 2020. The growth rate was particularly astonishing. At the end of November the yield was still 0.84 percent.
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On Thursday alone, the yield increased by 0.2 percentage points. This does not sound like much, but it is an extreme move in such a short time for the US Treasury Department. A lower average interest rate on seven-year US bond issues increased the selling pressure on the bond market. The problem was signed only 2.04 times.
Stock prices benefit from low bond yields because they are attractive compared to the market. Conversely, rising yields can be dangerous for stock prices. According to Michelle Meyer, a US economist at Bank of America (BofA), the situation for the US stock market will be critical if the yield on 10-year US bonds reaches the range between 1.75 and 2.0%.
In addition to rising returns, the strong recovery of the US economy is also having an impact on markets. Investors point to positive economic data in the direction that interest rates and inflation could soon raise and end the era of cheap central bank money.
At the end of 2020, the US economy was slightly better than previously thought. Despite the crown pandemic, gross domestic product grew from October to December at an annual rate of 4.1%.
In addition, initial unemployment claims have fallen further than expected, although the level is still high and many millions of people employed before the pandemic remain unemployed. This in turn shows that the US Federal Reserve is currently maintaining its extremely loose monetary policy.
Especially value stocks will benefit from this recovery. The corresponding S&P 500 sub-index rose almost nine percent this month, while growth in the stock barometer rose by only 2.5%.
Gold fall, oil and copper are rising
In addition to bonds, gold also came under selling pressure and fell 1.7% to $ 1,773 an ounce. Precious metal often serves as a protection against inflation. Because of the cost of storage, it becomes less attractive to investors when yields increase compared to bonds.
Meanwhile, other goods continued to accumulate. The price for the American WTI variety rose up to one percent to a 14-month high of $ 63.81 a barrel (159 liters). In addition to production cuts in the US state of Texas due to the cold season there, the commitment of US Federal Reserve Chairman Jerome Powell to a stable loose monetary policy drives prices, stock traders said.
At $ 9,617, a ton of copper was sometimes more expensive than it was in nine and a half years. Here Powell’s statements meet a tight offer, said commodity trader Anna Stablum of real estate company Marex Spectron.
Gamestop’s advertising campaign continues
The excitement surrounding the sick video game retailer Gamestop never ends in the US financial market. After heavy losses in recent weeks, the share of the American company, which has become the game of speculators, ended on Thursday at 20 percent. In the meantime, the profit was over 100 percent.
The course had more than doubled the day before. “Unlike in January, when small investors with coordinated markets forced hedge funds to cancel their bets on falling paper prices, there is currently no explanation for the price jump,” said Neil Wilson, chief analyst. online broker Markets.com. The whimsical prices at that time were called politics and stock market regulator in the plan.
Look further at individual prices
Tesla: According to a media report, the American manufacturer of electric cars should temporarily suspend part of its production in California. Because of this, the share was reduced by eight percent. Officials at the Model 3 assembly at the Fremont plant were informed that the films would be discontinued from February 22 to March 7, according to Bloomberg.
The reason for the cessation of production was not mentioned in the report. Production breaks are not uncommon in the automotive industry. Due to the lack of chips, however, they have increased recently.
Twitter: An optimistic outlook encouraged investors to join Twitter. Shares of US SMS service rose 3.7%. In a mandatory announcement, the company promises to double sales to at least $ 7.5 billion by 2023.
Modern: The US biotechnology company expects $ 18.4 billion in sales for its crown vaccine this year. New investments are planned to increase capacity to 1.4 billion doses of vaccine by 2022. Moderna also announced that Medical Director Tal Zaks will leave the company in late September. The stock rose 2.5% higher.
T-Mobile USA: The shares of the subsidiary of Deutsche Telekom also demanded, which increased by 1.3%. T-Mobile US prudently submitted the US frequency auction for the new $ 5.3 billion 5G wireless standard, praised analyst Colby Synesael of Asset Manager Cowen. This gives the company financial flexibility to expand its market share. Shares of rivals Verizon and AT&T, which put $ 45.4 billion and $ 23.4 billion at the table respectively for the new frequencies, fell more than one percent each.
With agency material
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