The Wall Street slide continues

D.US stocks fell further on Monday amid rising interest rates and recession concerns. Two days before the US Federal Reserve’s interest rate decision, market participants feared that unexpectedly high inflation could persuade monetary authorities to raise interest rates even more significantly. Stocks in tech companies were once again under pressure: their Nasdaq 100 selection index hit its lowest level since November 2020 and eventually lost 4.60% to 11,288.32 points.

The market-wide S&P 500 closed after its lowest level since March 2021 with less than 3.88% at 3749.63 points. Compared to the January record, this also means a drop of more than 20 percent, which means that the stock market barometer signals a bear market by its usual definition. The leading Dow Jones Industrial Index lost 2.79% to 30,516.74 points. Sometimes it was at its lowest level since February 2021: the recovery in the second half of May has faded.

There is nervousness, «because in addition to the inflationary dynamics, there are also signs of a decline in consumption. This would hit the economy twice and lead to economic downturns, “said Comdirect’s Andreas Lipkow. Furthermore, the nascent Covid problem in China is making investors nervous.

“There is (also) the fear in New York that even large-cap tech stocks such as Tesla and Apple, which technically have not yet developed a turnaround formation, will reverse,” he added. market analyst Jochen Stanzl. from the broker CMC Markets.

On the other hand, the market strategists of the US bank JPMorgan around Marko Kolanovi consider the price drop in recent days to be exaggerated. The significant losses and “sell off” of already more than adequately priced cryptocurrencies in a risk of recession. Experts are counting on a positive surprise from currency watchdogs and a recovery in prices in the second half of the year. This is supported by continued strong consumption, the economy is freed from the restrictions of the corona pandemic and economic stimulus measures in China.

They advise investors to focus primarily on stocks that now have relatively low valuations, such as particularly innovative companies, companies with a strong exposure to China, smaller companies and biotechs.

Among the tech stocks that had been beaten nonetheless, Amazon stood out negatively on Monday with a price loss of nearly five and a half percent. According to a media report, in conflict with EU competition authorities, the world’s largest online retailer has offered to limit the use of verbal buyer data and improve the visibility of competing products on the platform.

Cryptocurrencies under pressure

Tesla’s shares lost more than seven percent, although another large US company, the electric car maker, announced a stock split to make its shares cheaper for small investors. Tech billionaire Elon Musk’s company announced Friday after the US market closed that the board would accept a three-to-one split if shareholders approved it at the next annual general meeting. Tesla had already announced in March that it was planning a split. But it was not clear in what proportion. An upgrade from Canadian bank RBC, which now recommends the stock as “Outperform”, also didn’t help the price earlier in the week.

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