U.S. Stocks Suffer Worst Week Since 2020; Boric Boosts Chilean Markets

Bloomberg Línea’s market roundup for Friday, January 21:

🗽 On Wall Street:

A selloff of tech shares caused another day os losses in the U.S. markets, with the Nasdaq Composite (CCMPDL) extending its losses in the last minutes of trading, closing with a 2.72% decline.

The stock market began the year with a volatility that has yet to end, as analysts foresee the Federal Reserve tightening its monetary policy faster than expected. Investors are betting that the central bank will raise interest rates in March, and that there will be at least three hikes this year.

The S&P 500 (SPX) fell by 1.89% and accumulated a decline of 5.68% in the week, the largest since March 2020. The Dow Jones Industrials (INDU) slipped 1.30%, while the Nasdaq 100, which groups technology stocks most sensitive to rising interest rates, is on track for its worst month since the 2018 financial crisis, according to Bloomberg estimates. The index has erased more than $1 trillion in market capitalization.

🔑 Key Points of the Day

Bitcoin (XBT) plummeted, as did the major cryptocurrencies, to the point where they wiped out the equivalent of $1 trillion in market value. The cryptocurrency was losing 10.3% at 16:03 New York time, trading above $38,280.03, while Ether (XET), the second largest, was down 14.1% on the day to $2,746.71.

Cryptoassets have been one of the casualties of the nervousness gripping markets as expectations grow that the Federal Reserve will tighten its speech.

“Bitcoin is getting pummeled, hit by another wave of risk aversion in the markets that’s pushed the price below $40,000 and probably exacerbated the move in the process,” Craig Erlam, a senior market analyst for te U.K. and EMEA at Oanda, said in an email.

Bitcoin’s tumble since its November peak has wiped out more than $570 billion in market value, and approximately $1.17 trillion has been lost from the cryptocurrency market as a whole.

🥇 Latin America’s Leader:

The Chilean stock market was the only one in the region to bunk the poor performance of stock markets around the world.

President-elect Gabriel Boric’s announcement of his cabinet was well received by the markets, to the point that Chile’s main index Ipsa gained 3.52% during the day, making it the world’s best performer, according to Bloomberg’s ranking of the main stock market indexes.

Boric chose the current president of the Central Bank, Mario Marcel, to be his finance minister, sending a message to investors that his government will follow a responsible fiscal path.

The cabinet is led by politicians close to the former student leader, with more women, and also incorporates figures from the traditional center-left parties.

📉 A Bad Day:

In Latin America, the Mexican stock market was the worst performer, linked to the poor performance of the U.S. markets.

The materials, consumer and financial sectors were the worst performers. Shares of Cemex (CEMEXCPO), Alsea (ALSEA*) and Grupo Financiero Banorte (GFNORTEO) were among the session’s biggest losers.

In the case of Banorte, the Mexican bank would need at most three months to evaluate the retail banking business that Citi (C) plans to sell in Mexico, Rafael Arana, Banorte’s chief financial officer, said during a conference call with analysts on Friday.

The Brazilian stock market, Latin America’s largest by market capitalization, declined 0.15% on the day.

🍝 For the Dinner Table Discussion:

You may be enjoying a good series on Netflix (NFLX) tonight or over the weekend, but the company’s investors probably won’t be having such a good time. The New York-listed stock scored its biggest drop since 2014 after analysts downgraded their forecasts following the disappointing earnings report released this week. Shares fell as much as 25% during Friday’s session.

Nine companies tracked by Bloomberg cut their recommendation for the stock after Netflix forecast adding just 2.5 million customers in the first quarter, compared with analysts’ expectations of 6.26 million new subscribers.

The streaming platform added just 18.2 million customers in 2021, down 50% from the previous record year, amid increasing competition in the sector.