Higher interest rates affected US stock markets at the start of the Easter week. AT&T rose sharply after getting rid of Warner Bros.
This is how the day ended on Wall Street:
- The S&P 500 fell 1.68%
- The Nasdaq fell 2.18 percent
- The Dow Jones index fell 1.19 percent
The decline came at the same time that long-term interest rates were rising. At the time of writing, the “world’s hottest interest rate”, the yield on 10-year US government bonds, was 2.78 percent.
The US “ten-year-old girl” is thus at its highest level since January 2019.
Higher interest rates are a negative, especially for growth companies, where profits come in ahead of schedule. Increased financing costs can reduce the profitability of companies, which in turn affects the stock market.
Tech companies are often affected by higher interest rates, which is also seen on Monday. Shares of giant Microsoft fell 3.92 percent. Meanwhile, computer chip makers Nvidia and Advanced Micro Devices fell 5.20 and 3.59 percent, respectively.
The Nasdaq 100 has fallen in four of the past five days. The index consists of the 100 largest companies listed on the Nasdaq Stock Exchange. The downturn over the past five days has slashed the companies’ market value by more than $1,000 billion, according to Bloomberg.
– There is a lot of pessimism, investment manager Kim Forrest at Bouquet Capital Partners tells the news agency.
– The war in Ukraine, high interest rates, fears of a recession, China’s coronavirus shutdown and then oil prices – it’s all very bleak, he continues.
Rising after a giant merger
The newcomer hit the US stock market on Monday after the merger between two media companies, Warner Bros. Discovery was held this weekend.
The company is named Warner Bros. Discovery, and rose 1.27 percent on the first trading day.
The new company owns HBO, CNN, Eurosport, TLC, and others. Here at home, the giant is also the owner of TV channels TV Norway, Max and Vox.
AT&T has practically sold Warner Bros. to Discovery in connection with the agreement, although AT&T shareholders are now the largest owner in the combined company.
AT&T in particular sailed as one of the winners on Wall Street Monday night, up more than seven percent. This happens, among other things, after analysts at JP Morgan believe the stock is now selling at a discount, according to CNBC.
Waiting for inflation figures and results
On Tuesday afternoon, the latest inflation figures came out of the USA. Inflation is expected to end in March at 8.4 percent from a year earlier, according to Bloomberg. In February, inflation was 7.9 percent.
This weekend, Loretta Meester, chief executive of the Federal Reserve Bank of Cleveland, told CBS she still believes the central bank will get it under control without causing significant damage to the economy.
“If you look at the risk by looking at what’s happening in the world and the economy, there’s an increased risk,” Meester said of the possibility of a recession. CNBC.
“But I remain optimistic, and my expectations for the next year are certainly that the expansion will continue,” she continued.
Later this week, the largest US banks will present the numbers, which mark the start of earnings season in the US.
Although earnings season in the US – which begins this week – is showing healthy earnings growth, we doubt that expectations for future results will be revised higher, market economist Oliver Allen wrote in Capital Economics in a note, according to Market Watch.
– This will build on our expectations of a slight rise in the US stock market for the rest of the year, he continued.
Musk refused to get on the plane
After Elon Musk joined the owner’s Twitter page last week, it became known that he was offered a position on the company’s board of directors. The news pushed the stock sharply higher at the start of the week. Musk owns about nine percent of the shares in Twitter.
On Monday evening, Twitter chief Parag Agrawal wrote that Musk had decided not to take a seat on the board. Agrawal wrote that Musk himself made the decision, but it’s for the better.
“We have and will always appreciate input from our shareholders, whether they are members of the board of directors or not. Elon is our largest shareholder and we will remain open to his input,” Agrawal wrote.
Twitter’s share had a turbulent day after the news, but it was up 1.73 percent.
The decision not to join Musk on the board means that the Tesla chairman can buy more shares than if he had held a seat on the board. Last week, it became clear that he would be allowed to own a maximum of 14.9 percent of Twitter shares for the entire time he was sitting on the board.
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