Wednesday May 12, 2021
Apple, Amazon and Co in the red
Wall Street is afraid of inflation
Consumer prices in the USA are surprisingly strong. And as a result, concerns about tighter monetary policy are emerging on the US stock exchanges. That doesn’t do the big tech stocks any good, because they are particularly sensitive to interest rates. The indices are also going downhill.
Fears of inflation and interest rate hikes have trade to the US stock exchanges overshadowed. The Consumer prices rose much more clearly than expected in April and rose as much as last year in 2009. Participants spoke of a second massive false prognosis after the latest labor market report was far worse than expected. On a monthly basis, inflation rose by 0.8 percent, while experts had expected 0.2 percent. Annual inflation is 4.2 percent, well above the US Federal Reserve’s target.
The Dow-Jones-Index fell 2 percent to 33,587 points. That added up to the biggest three-day loss in seven months. The S&P-500 decreased by 2.2 percent. The technology-heavy one Nasdaq-Composite lost 2.7 percent.
Technology stocks are considered to be particularly interest-sensitive due to the high level of debt capital of the sector companies. The Dollar put on, and on Bond market the returns went up.
The price data gave new food to the fear of a sharp rise in inflation and thus also fueled fears that the US Federal Reserve would respond with a tighter monetary policy might react. This is true even though various US central bankers have recently emphasized that they do not see any need for this at the moment. On the other hand, there were also high inflation forecasts from their ranks. However, the US Federal Reserve has repeatedly emphasized in the recent past that such price increases are of a temporary nature.
On the bond market, the Ten year return around 8 basis points to 1.70 percent. The Dollar index increased by 0.7 percent. The Euro fell from rates around 1.2120 before the data was released to $ 1.2072 and was only marginally above it.
Tech values like Amazon leave feathers
On the corporate side, among other things, the video game developer Electronic Arts Business figures presented that tended to disappoint, albeit garnished with an optimistic outlook. The stock fell 1.2 percent. The numbers of Wendy’s (minus 1.4 percent) and Unity Software (minus 0.3 percent) while Fubo TV (plus 9.7 percent) advanced vigorously after doubling sales.
Amazon showed 2.2 percent weaker, although the online retail giant has achieved legal success in the dispute over tax breaks with the EU. The Court of Justice of the European Union (EGC) in Luxembourg overturned a decision of the EU Commission from 2017 that ordered Amazon to pay taxes of 250 million euros to Luxembourg. However, the other big technology stocks also fell significantly, for example Apple (minus 2.5 percent), Alphabet (minus 3.1 percent) or Microsoft (minus 2.9 percent)
The Oil prices rallied despite US oil stocks falling less than expected, according to official data on Wednesday. Meanwhile, support came from the International Energy Agency (IEA). This expects that towards the end of the year, demand will exceed supply on the oil market. The Gold price got gripped by the soaring dollar and higher returns. The fact that gold is used to protect against inflation did not help the price up either.