Despite the high increase in the US 10-year treasury yield, the S&P 500 recovered its morning losses and increased by 0.45%.
Wall Street is about to end Monday’s session with some positive gains, despite the tragic fall in the 10-year U.S treasury yield. Amid fears of this week’s Federal Reserve official meeting, the U.S 1 year treasury yield rose by 3% at the opening.
This was the first time that U.S treasury bonds rose by more than 3% since 2018. The S&P fell by 0.4% in the morning, the Nasdaq rose by 0.39%, and the Dow index jumped by 0.54%. Nonetheless, by Monday at 3:50 PM, the S&P index had recovered and increased by 0.50% to 33,039.40. The Nasdaq index gained 1.54%, and the Dow Jones index declined by 0.2%.
Morang Stanley addressed the situation in his latest note by simply saying that a 50% interest hike will occur in May. Morgan also stated that the Federal Reserve remains committed to adjusting its balance sheet by June, which includes lowering bond purchasing power.
Last week, major tech corporations released their 2022 Q1 financial report, which was a disappointment for many economists. Given that ten of the major S&P companies account for 30% of the index’s market value and stock performance,
The stock market set new highs and lows last week, but the new 52-week lows are threatening market stability.
Last week, Amazon Inc.’s revenues for the first quarter were down by 12.5% due to rising costs and the current supply chain crisis. The decline was expected many months ago by us, due to the rising geopolitical tension back then. Undoubtedly, the war has put the global supply chain into a tight corner. That will have a major effect on the global industries, including tech stocks as well.
The evidence suggests that in the U.S, April’s manufacturing activity fell to its lowest level since 2022, and it can get lower. The U.S labor force remains far away from pre-pandemic levels, as workers find it hard to find new jobs. The COVID effect on the labor market is still hunting the U.S labor force and the solution won’t be completed on time.
However, things could get a lot worse. Yet, thanks to the positive gains for major brands such as Microsoft and Alphabet, the stock market managed to get back on its feet this week.
On another note by Jefferies, China’s latest lockdown on Shanghai and its claims of invading Taiwan will tighten the global supply chain. Taiwan is the world’s largest ship supplier, and the U.S strongly disagrees with the fact that Taiwan is a part of China.
From an economist’s perspective, the Chinese economy is moving at a faster rate than the world has ever seen before. By claiming Taiwan, China will declare itself a world leader in the semiconductor industry. That will somehow tighten the U.S supply chain.
Add to that the lockdown which had affected the investor’s sentiment and made them a bit worried about what it meant for the tech stocks.
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