Affected by interest rate hikes and the outlook for inflation, technology stocks remained weak, and US stocks opened lower on Monday (10th). Before the deadline, the Dow Jones Industrial Average fell more than 300 points or 0.8%, the S&P 500 fell 1.12%, and the Nasdaq Composite Index and the Philadelphia Semiconductor Index both fell more than 1.7%. The 10-year U.S. Treasury yield stood at 1.8%, a two-year high.
The Fed released the minutes of its December meeting last week, suggesting that the central bank may raise interest rates and start shrinking balance sheets sooner than expected. Goldman Sachs economists now expect the Fed to raise interest rates 4 degrees this year, one more time than previously expected, and the fastest Schedule reduction will start in July or before.
Following the highest level since January 2020 last week, the 10-year U.S. Treasury yield stood at 1.80% before the deadline on Monday.
In the face of the more hawkish Fed, technology stocks, including growth stocks, have a poor start this year, while banking stocks have been boosted by expectations of interest rate hikes, which rose by 9.4% last week.
Affected by interest rate hikes and the outlook for inflation, large technology stocks started to lose weight. Before the deadline, Tesla (TSLA-US) fell nearly 4%, Alphabet (GOOGL-US), Amazon (AMZN-US) and Microsoft (MSFT) -US) all fell more than 2%, and Apple (AAPL-US) fell more than 1.5%.
Bank stocks were mixed. JPMorgan Chase (JPM-US), Citi (-US) and Wells Fargo (WFC-US) and other large banking stocks will announce their earnings on Friday, kicking off the US stock earnings season.
Fed Chairman Jerome Powell will attend the Senate’s nomination hearing on Tuesday (11th). The market expects that Senate Banking Committee members will question Powell on issues such as interest rate hikes, balance sheet reduction, and financial supervision. .
In addition, investors will also pay attention to the inflation indicators announced on Wednesday and Thursday. The market expects that the Consumer Price Index (CPI) in December will increase by more than 7% over the same period last year, the first time since 1982.
As of Monday (10th) 22:00, Taipei time:
- The Dow Jones Industrial Average fell 317.78 points or -0.88%, temporarily at 35911.88 points
- The Nasdaq Composite Index fell by 259.22 points, or-1.74%, to 14676.68 points temporarily
- The S&P 500 Index fell 52.31 points or-1.12%, temporarily at 4,624.72
- Fees and a half fell 65.49 points or-1.73%, temporarily at 3732.26 points
- TSMC ADR rises 1.31% to $125.12 per share
- 10-year U.S. Treasury yield rises to 1.805%
- New York Light Crude Oil fell 0.33% to US$78.64 per barrel
- Brent crude oil fell 0.26% to US$81.54 per barrel
- Gold fell 0.40% to US$1,790.30 per ounce
- The dollar index rose to 96.155
Lululemon Athletica (LULU-US) fell 8.85% in early trading to $323.78.
Lululemon warned on Monday that due to problems such as shortened store hours and labor shortages caused by the Omicron variant, the fourth quarter sales and profits may fall at the low end of the financial forecast range.
Zynga (ZYGN-US) rose 46.42% to US$8.78 in early trading; Take-Two Interactive (TTWO-US) fell 8.63% to US$150.40.
Game developer and publisher Take-Two Interactive will acquire peer Zynga for US$9.86 per share for a total of approximately US$12.7 billion. The transaction is expected to be completed in the second quarter of this year.
Take-Two Interactive’s well-known games include Grand Theft Auto, Civilization and Red Dead Redemption, etc., while Zynga has FarmVille and Fighting Word game “Words With Friends”.
Tilray (TLRY-US) rose 17.47% in early trading to $7.54.
Benefited from the strong demand for cannabis-related products, cannabis producer Tilray announced that its revenue in the previous quarter increased by 20% to 155 million U.S. dollars, and its profits also increased from the same period last year.
Today’s key economic data:
- At 23:00 Taipei time, the final monthly rate of US wholesale inventories in November is announced, which is expected to be 1.2%, and the previous value is 1.2%
- At 23:00 Taipei time, the monthly rate of US wholesale inventories in November was announced, which was 2.2% before.
Wall Street analysis:
Nicholas Colas, co-founder of DataTrek Research, said that last week’s stock market trend depends entirely on how the Fed handles the balance sheet. The hearing on Tuesday will give Ball an opportunity to assure Congress and the public that the Fed will work to reduce inflation this year. This is expected to intensify the market turbulence this week.
Swissquote analyst Ipek Ozkardeskaya believes that there are still many hawkish positions that have not yet been priced, which may lead to more sell-offs in the market this week, especially growth stocks, which should feel greater interest rate pressures compared to value stocks.