The New York Stock Exchange opened sharply lower after another inversion of the bond yield curve, the latest illustration of the fear of many investors that the Federal Reserve will raise interest rates too quickly and promote a recession. the Dow Jones lost 2.04% to 30,751.35 points. the S&P500 fell 2.65% to 3,797.36 points. the Nasdaq yields 3.11% to 10,987.50 points. The S&P 500 thus brings its decline to more than 20% from its closing peak on January 3 (4,796.56 points), which corresponds to the definition of a bear market, a dreaded configuration. by the market.
The CBOE volatility index, a closely followed barometer of investor nervousness, exceeds 32 points, the highest since May 20. On the bond market, the yield on two-year Treasury bills is up 16 basis points to 3.2077% and the ten-year by almost 12 points to 3.2742%. The portion of the yield curve between these two maturities briefly inverted early in the day, confirming thatsome investors fear a recession in the coming months due to the rapid rise in the Federal Reserve’s key rates.
It is expected, according to consensus, to announce a half-point increase in its main rate on Wednesday, but after the higher than expected inflation figures in May, a growing number of investors fear that it will opt for a three-quarter point increase. This context continues to penalize in the first place the large growth stocks and the main capitalizations of the high technology sector such as Apple, Alphabet, Microsoft and Amazon, which yield between 2.8% and 4.4%. The evolution of bond yields also penalizes the financial sector: Bank of America loses 2.29%, JPMorgan 1.99%, Morgan Stanley 2.8% and Visa 3.26%. All Dow Jones stocks are moving into negative territory and the biggest drop is for Boeingwhich fell by 5.65%.