Given the rapidly increasing Covid infections in China, investors are concerned that the virus will re-spread worldwide, with possible new variants, after China recently bid farewell to its zero-COVID policy and further loosened its corona measures. From January 5, travelers from China will again need to show a negative corona test to enter the US.
Dow Jones Industrial slumped 1.10 percent to 32,875.71 points midweek, meaning the leading index slipped back below the 50-day line, which is considered an indicator of the medium-term trend. Overall, the S&P 500 fell by 1.20 percent to 3783.22 points. The technology-heavy Nasdaq 100 also fell by minus 1.32 percent to 10,679.35 points. All three indices are currently showing a clearly negative annual balance, with interest-sensitive tech stocks in particular falling under the wheels in 2022.
The previous day, market participants were still focusing on the easing of the coronavirus in China and therefore hoped for a brighter economic outlook. But that didn’t help the stock market much, as an economic recovery also likely means higher inflation and higher interest rates – and these are particularly impacting stocks of tech companies whose growth investments are becoming more expensive.
Rising yields in the bond market have been one of the main drivers of stock market weakness this year, given the US Federal Reserve’s rate turn, and again a midweek scam.
Among individual values, electric car maker Tesla remained in focus. After their recent decline, stocks have at times found it difficult to stabilize. But in the end, it was clearly higher at 3.3 percent. The price drop since the start of the year has reached 68 percent, making Tesla one of the biggest losers in the Nasdaq 100 in 2022.
At its lowest price level since mid-2021, shares of iPhone group Apple fell 3.1 percent again on Wednesday to the lowest point of the Dow. JPMorgan gained 0.6 percent, ahead of the leading index. The daily winner and loser on the Dow exemplifies the interest rate turnaround that has shaped the stock market this year; While technology stocks suffer, banks take advantage of it.
Southwest Airlines increased its losses the previous day to 5.2 percent, the lowest level since mid-October. The airline upset its customers with multiple flight cancellations and delays over the Christmas weekend. The US Department of Transportation announced that it has launched an investigation.
While other airlines also suffer from harsh winter weather in much of the US, they don’t report nearly as many cancellations as Southwest. The problems are likely to continue for now, according to the company. Aviation experts and analysts complain that there is no investment in the technology.
The euro was trading at $1.0610 after the close in New York. The European Central Bank (ECB) set the reference rate at 1.0640 (Tuesday: 1.0624) dollars, the dollar cost 0.9399 (0.9413) euros.
Ten-year bond futures contract (T-Note Future) fell 0.10 percent to 112.22 points in the US bond market. By contrast, the yield on ten-year government bonds rose to 3.88 percent.
(SDA)