The New York Stock Exchange ended in disarray Tuesday without recovering, halted by another hike in bond yields and information about the possible sabotage of two gas pipelines in Europe.
The Dow Jones chained a sixth straight decline, falling 0.42%, but also ended up posting a new yearly low, the third straight. The Nasdaq rose 0.25%, while the broader S&P 500 index lost 0.20%.
Wall Street had opened in the open and picked up steam this morning, helped in part by testimony from Chicago Branch Chairman Charles Evans. The central banker said he was “nervous” at the idea of chaining rate hikes without pausing to gauge the impact on the economy.
But providing counterpoint later in the day was his St. Louis counterpart James Bullard, who said the labor market was strong enough for the institution to get inflation under control “as soon as possible”.
Neel Kashkari, chairman of the Minneapolis branch, echoed this, saying the Federal Reserve is conducting its monetary tightening “at an aggressive and appropriate pace.”
“The message from the Fed that it wants to remain mobilized (…) suggests that operators will be very cautious before following the recovery and projecting higher,” commented LPL Financial’s Quincy Krosby.
“The biggest thing today was bond yields,” said Tom Cahill of Ventura Wealth Management. “They keep breaking records.”
The 10-year government bond yield thus came in at 3.99%, approaching the symbolic 4% threshold, its highest in 12 years, before settling slightly at 3.96% from 3.92% on Monday.
For Tom Cahill, this already negative sentiment for stocks has been overshadowed by news of a possible sabotage of the two Nord Stream gas pipelines, which were leaked after blasts. Danish Prime Minister Mette Frederiksen spoke of “deliberate acts” and her Swedish counterpart Magdalena Andersson spoke of “sabotage”, as did European Commission President Ursula von der Leyen.
“It’s hard to really get up with all these headwinds, even when the market is oversold,” said Tom Cahill.
Signs of renewed jitters on Wall Street, the VIX index, which measures market volatility, has risen to crowded highs since mid-June.
“I found it odd that it’s been very low for the past few weeks,” noted Tom Cahill. “But today I see fear in the market.”
The Nasdaq was saved by a bargain hunt, from which Apple (+0.66%), Tesla (+2.51%), Nvidia (+1.51%) or Broadcom (+0.54%) benefited the most.
Cheap buys also targeted some of the most volatile stocks on the stock market, whether Airbnb (+3.04%), PayPal (+1.77%) or AMC (+9.08%).
On the other hand, the Dow Jones was weighed down by McDonald’s (-2.90%), which a Citi analyst wants to downgrade in its recommendations, Procter & Gamble (-2.75%) and Coca-Cola (-2.57%).
The electric vehicle subsidiary of legendary Harley-Davidson motorcycle maker LiveWire had a difficult first day of trading, losing 12.14% to $8.25.