Thursday, June 03, 2021
Dow Jones closes in the red
Inflation worries weigh on US stock exchanges
US companies are hiring more than they have for almost a year, and consumption is increasing. This is noticeable on Wall Street: Investors are unsettled by inflation and interest rate worries. In the end, the indices turn into the red after volatile trading.
On Wall Street, investors again moved between interest rate worries and economic hopes. The indices tended to be changeable and inconsistent, but ultimately closed in the red. The Dow-Jones-Index, which in the meantime picked up with strong economic data, ended up 0.1 percent lower at 34,577 points. The S&P-500 and the Nasdaq-Composite gave more clearly at 0.4 and 1.0 percent respectively.
The dichotomy in the market found nourishment in new economic data, which were consistently strong. According to the ADP report, more jobs were created than forecast. In addition, the number of initial applications for US unemployment insurance benefits fell more sharply than expected. The ISM index for the non-manufacturing sector also performed better in May. Support here is that the job component, while good, was not good enough to fuel interest rate worries. But the extremely high price component causes frowns again. And finally, the revision of the Markit purchasing managers’ index for the service sector was stronger than expected.
The previous evening, however, the US Federal Reserve’s “Beige Book” economic report left no doubt about inflationary pressures – fueled by rising consumption, problems in the supply chain and labor shortages. “The Fed is gradually planting the seeds for a normalization of monetary policy, which could become the dominant market theme by late summer or autumn – provided US economic data remains strong,” says analyst Marios Hadjikyriacos from XM.
Dollar is picking up
The dollar index increased massively with the data and rose by 0.7 percent. The expectation of monetary policy tightening supported the greenback. The same expectations drove 10-year US Treasury yields up as well. Rising market rates and the strength of the dollar put the gold price under considerable pressure. The persistently high inflation data should, however, stimulate demand for the precious metal again in the short term, according to retailers.
In the case of oil, the air appeared to be a little out of steam after the recent rally at multi-year highs. Despite falling crude oil stocks, prices fell somewhat. Participants referred to the increased inventories of gasoline. They fear that soaring gasoline prices could depress demand.
The US automaker General Motors (GM) assumes that its pre-tax profit for the first half of the year will be “significantly better” than previously expected. Steps have been taken to increase deliveries to US dealerships and customers in Canada to meet strong customer demand for the Chevrolet, Buick, GMC and Cadillac models. The share gained 6.4 percent. The competitor’s share Ford even rose by 7.3 percent. Ford wants to bring a small pickup truck to the market. Lost against it Tesla 5.3 percent.
Was the weakest stock in the Dow Merck (-2.6%). The experts at S&P have lowered the long-term credit rating to A + from AA-.
The technology company Splunk reports a higher loss for the first quarter than analysts expected. For the share it went down by 9.5 percent. The papers of Netapp rose by 2.1 percent. The company, which operates in the field of data storage and management, exceeded estimates in terms of sales and profits. In addition, the share buyback is to be expanded by $ 500 million.