Democrats and Republicans have been unable to agree on a compromise for weeks. The volatile climate in Washington is now also making itself felt on Wall Street.
Burdened by the still unresolved dispute over raising the debt ceiling, the US stock markets collapsed on Tuesday. The Dow Jones Industrial accelerated its initially moderate slide in late trading and closed down 0.69 percent at 33,055.51 points. The market-wide S&P 500 fell 1.12 percent to 4145.58 points. The Nasdaq 100 fell 1.28 percent to 13,672.54 points.
In the US debt dispute, another top-level talk did not solve the problem, even if the White House and the Republicans expressed satisfaction with the course of the talks from the previous day. Without a compromise, there is a risk of a US default at the beginning of June, with potentially serious consequences for the financial markets and the global economy.
Apple and Broadcom provide topics of conversation
From an industry perspective, energy stocks were at the top of investor favourites. The reason for this is the sharp rise in oil prices. A renewed warning from the leading oil-producing country, Saudi Arabia, against speculating that oil prices would continue to fall had a corresponding effect on the market. ExxonMobil shares rose 1.4 percent, while Chevron climbed 2.9 percent at the top of the Dow. HSBC analysts previously upgraded Chevron’s stock to “buy”.
Among the individual stocks, Apple and Broadcom provided topics of conversation. The iPhone group will have parts for communication chips developed and manufactured in the United States as part of a multi-billion dollar deal with the semiconductor manufacturer. The multi-year agreement includes, among other things, components for 5G radio technology. Apple stocks fell 1.5 percent while Broadcom stocks rose 1.2 percent.
Netflix shares fell 1.9 percent. Users of the streaming service who share an account across a household will soon be asked to pay in addition. The action against the sharing of accounts had been announced for some time and had been successfully tested in several countries before the broad launch that has now been announced.
Moderna is gaining ground
Zoom’s shares lost 8.1 percent at the bottom of the Nasdaq 100 index. The video conferencing provider estimates its sales and earnings prospects for the financial year better than before. However, the company didn’t add as many large corporate accounts in the fiscal first quarter as analysts were expecting. This development is critical in proving Zoom can regain revenue growth.
At times, Moderna’s stock soared more than 10 percent, to its highest level in about a month. Ultimately, they won 8.7 percent. Several stockbrokers had previously commented positively on the further prospects of the vaccine manufacturer and the share.
The retail chains Lowe’s and Autozone were also in the spotlight with their quarterly figures. Lowe’s reported a decline in profit for the first quarter, but it was better than expected. However, the company lowered its annual targets. With a price increase of 1.7 percent, the share was one of the top values in the S&P 100 index. Autozone fell 6.0 percent despite better-than-expected third-quarter earnings. However, sales missed the average analyst estimate. In addition, the stock has been doing well recently and only reached a record high around two weeks ago.
US government bonds turn positive
The euro stayed below the $1.08 mark in US trading and was last listed at $1.0770. The European Central Bank (ECB) set the reference rate at 1.0779 (Monday: 1.0822) dollars. The dollar thus cost 0.9277 (0.9240) euros.
US government bonds made up for their initial price losses and turned positive. The futures contract for ten-year bonds (T-Note Future) was last listed 0.11 percent higher at 113.59 points. In return, the yield on ten-year paper fell to 3.70 percent.
Source: Stern
