PARIS, May 12 (Reuters) – The New York Stock Exchange opened lower on Thursday, penalized by the prospect of a sharp rise in interest rates in the United States at the risk of eventually plunging the economy into recession to counter galloping inflation.
In early trading, the Dow Jones index lost 311.02 points, or 0.98%, to 31,523.09 points and the broader Standard & Poor’s 500 fell 1.20% to 3,887.89 points.
The Nasdaq Composite lost 1.77%, or 200.94 points, to 11,163.287.
An hour before Wall Street opened, the US Labor Department reported that producer price inflation had decelerated to 0.5% month-on-month, a pace in line with expectations, and to 11 0.0% over one year, against a consensus of +10.7%.
While these new data, like those published the day before on consumer prices, show a slowdown, inflation remains very high, well above the 2% target of the American Federal Reserve (Fed), which which could lead the central bank to accelerate the raising of its interest rates.
Most money markets are still expecting a 75 basis point rise in the cost of credit in June.
“What we’re seeing is that inflation is starting to slow down, but the pace isn’t as fast as we’d hoped. So I think the markets are still in inflation fear,” Gene said. Goldman, chief investment officer at Cetera Investment Management.
“There’s really a lot of uncertainty around the Fed right now. If it’s too aggressive, it’s going to hurt economic growth, but (if) it’s too conservative, higher inflation will hurt consumption, which which will also affect growth,” he added.
On Thursday, Foxconn, the world’s largest consumer electronics supplier, reported slowing demand in the sector due to inflation, supply chain strains and health restrictions in China. .
In this context, technology stocks, already sensitive to changes in interest rates, fell. Apple, of which Foxconn is the main supplier, lost 2.3%, giving up its place as the world’s largest market capitalization in favor of Saudi Aramco. Amazon, Microsoft, Alphabet, Intel, Advanced Micro Devices and Nvidia fell, for their part, from 1% to 2.3%.
In business results, Walt Disney fell 3.5% after a second quarter below expectations. The entertainment giant further warned that supply issues and rising labor costs could affect its accounts.
Beyond Meat, for its part, plunged 16.5% in reaction to the publication of a widening of its net loss in the first quarter also linked to a rise in its costs.
Oil companies Chevron, ExxonMobil, Callon Petroleum and Occidental Petroleum drop 0.5% to 2.4% as oil prices fall, hurt by dollar strength ahead of higher interest rates .
(Written by Claude Chendjou, edited by Jean-Michel Bélot)