A roundup of Thursday’s stock market results from across the region
🗽 On Wall Street:
Stock market optimism didn’t last more than a day and, after Wednesday’s gains, investors further weighed the Federal Reserve’s decision and the main U.S. stock market indices plummeted as analysts doubt that the central bank will be able to control the highest inflation in decades without pushing the world’s largest economy into recession.
Amid these fears, the S&P 500 fell 3.5% and recorded its second-largest retreat of the year, while the Dow Jones Industrials lost 3.12%, and hardest hit was the Nasdaq Composite (CCMPDL), which plunged 4.99%.
Both the Dow Jones and Nasdaq had their steepest declines since 2020.
Adding to this was a massive sell-off in long-term Treasuries that pushed the 10-year yield above 3%
“It’s going to be incredibly difficult for the Fed to normalize interest rates without having a negative impact on growth and earnings,” Paul Nolte, portfolio manager at Kingsview Investment Management, told Bloomberg.
On Wednesday the Federal Reserve raised interest rates by 50 basis points, the highest increase since 2000, and Chairman Jerome Powell acknowledged that monetary policy could bring “some pain” as it tries to curb the rising cost of living.
🔑 The Day’s Key Events:
Oil prices ended with gains on a volatile day and touched their highest level in three weeks as investors continue to keep an eye on supply issues amid the war in Ukraine and the European Union’s proposal to completely cut its oil dependence on Russia.
“With so many contributing factors at play, it’s not surprising that volatility has been injected back into oil prices,” Fiona Cincotta, senior market analyst at City Index, told Bloomberg.
OPEC and its allies agreed to increase production by 432,000 barrels per day in June, following the plan that had been outlined since before Russia’s invasion of Ukraine.
Despite this, the group of countries has shown difficulties in raising its production after the increase in April was only 10,000 barrels per day, according to Bloomberg.
📉 A Bad Day:
The sharp declines on the U.S. stock markets spread to Latin American markets, which closed the day in the red, with Peru’s index putting in the worst performance of the day.
The S&P BVL Peru (SPBLPGPT) fell more than 6%, impacted not only by the volatility of international markets, but also by the uncertainty generated after the approval of a bill that allows a new withdrawal of pension savings.
Such a sharp drop has not occurred since June 2021.
César Romero, head of Research at Renta4 SAB, considers that the pension savings withdrawals will have a bigger impact, since the stocks listed in the Peruvian market depend more on those movements than on what may happen with interest rates or stocks in the United States.
🍝 For the Dinner table Debate:
Investors named in a filing disclosed Thursday include cryptocurrency exchange Binance, Brookfield Asset Management (BAM), Fidelity Management & Research and Qatar Holding.
Musk has also won the backing of entrepreneur and Oracle (ORCL) co-founder Larry Ellison, who has a large stake in Tesla (TSLA) and a seat on its board. Ellison’s fund has committed $1 billion to finance the entrepreneur’s acquisition.
The new capital allows Musk to trim the size of the loan he had previously agreed to with a number of investment banks, from $12.5 billion to $6.25 billion.