This Thursday markets were waiting for the results of the Financial Giants. Banks of Wall Street performed better than expected but the Tech department brought the Dow on the bottom with them.
The Dow Jones Industrial Average lost 0.33%, or 113 points down, S&P slipped 2.1% and Nasdaq dropped 2.1%.
The first-quarter results from Banks beat analyst’ expectations, Goldman Sachs (-0.10%), Morgan Stanley (+0.75%), Citigroup (+1.56%). Wells Fargo went the opposite direction due to poor Company’s quarterly reports, losing 4.5%.
The recent fall in bank stocks is a result of investors betting that the Federal Reserve will become more aggressive with their monetary policies to combat inflation.
Indeed, the Federal Reserve strategy linked to the rising Treasury Yields, which is translating in a growth of margins on loans made by banks with the final aim to restrain inflation, seems at the moment affecting the market stability.
The tech-heavy NASDAQ Composite Index is down over 15% (-15.67% YTD and -2.3481,72 points) this year, with big losses coming in major growth sectors like social media and software.
The pace of the surge in yields has placed these long term investments at risk—and it’s not clear when we’ll see them recover from their current state.
Big tech led by Apple have been in red for almost all the session, closing the day with negative results all above 2%. Apple (-3.00%), Microsoft (-2,71%), Amazon (-2,47%), Google (-2,44%) and Meta Platforms (former Facebook -2.24%).
Twitter at first tried to move in contrast, but failed to hold its gains losing 1,68%. “Tesla’s Dad” announced an offer of $54.20 per share to make the bluebird a private company. But the game will be played in the next days due to Wedbush saying in a note that “Twitter’s Board will not view this offer” until Mr. Musk led a change in the company in the best interest of the company itself and shareholders.
In an effort to create a platform for free speech, Elon Musk’s vision for Twitter Inc would cost $43 billion cash for a takeover offer. The Tesla CEO says that the social media company needs private ownership in order to grow and become more than just “a repeat-start.”
Peloton Interactive (-4.63%), the interactive fitness equipment maker that offers bikes and treadmills at competitive prices to compete with major brands like Nike(+4.68%) and Under Armor (-5.50%) has cut prices on their products in an effort regain user growth; however they’re also increasing monthly fees for access content.
In the red also UnitedHealth Group (-0,41%), notwithstanding better than expected quarterly results and an increase in full-year guidance.
Energy avoided a fire sale, underpinned by rising oil prices as global supply fears abound due to the conflict between Russia and Ukraine.
On the macroeconomic side, investors become aware of the tragical data on Initial Jobless Claims which rose more than expected (Previous: 167K – Forecast 171k – Actual 185k), and inflation which is striking the Retails Sales (Previous 0,8% – Forecast 0.6%, Actual 0,5%). Economist behavior is still positive relying on the savings built up during the pandemic.
