NEW YORK: Wall Street stocks mostly fell on Tuesday (Dec 27) in anticipation of more central bank interest rate increases, while Southwest Airlines tumbled as it was stymied by operational woes following a bad storm.
Stocks were under pressure most of the day in the first session of the week after Monday's closure due to the Christmas holiday.
The yield on the 10-year US Treasury note – a proxy for Federal Reserve interest rates – climbed closer to 4%, weighing on sentiment. The impact was greatest on tech shares, which generally rely on debt financing more than industrial companies.
“Higher (Treasury) yields are pressuring growth stocks, and on the other hand industrials, utilities and energy are outperforming,” said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska. “Money’s flowing out of the growth areas and working its way to the value side of things, which is a microcosm of what we’ve seen all year.”
“It’s important to remember that there are other groups that can take up the baton when the high-flyers come back to earth,” he added.
The Dow Jones Industrial Average rose 37.63 points, or 0.11%, to 33,241.56, the S&P 500 lost 15.57 points, or 0.40%, to 3,829.25 and the Nasdaq Composite dropped 144.64 points, or 1.38%, to 10,353.23.
With just three trading days remaining in 2022, all three indices are on course to post their biggest annual loss since 2008, the nadir of the global financial crisis.
“It was a bad year for stocks, but a worse year for bonds. That’s extremely rare,” Detrick said. “It’s an unfortunate reminder that the markets can sometimes surprise.”
Tuesday’s session is part of the so-called “Santa Claus rally” period, a seven-session stretch over the weeks of Christmas and New Year typically sees stocks drifting higher amid light trading volumes.
But markets were in the red most of the day.
Among individual companies, Southwest Airlines sank 6% as it continued to cancel a significant number of flights even as bad weekend weather cleared and other carriers resumed normal operations.
The US Department of Transportation said in a statement it was “concerned by Southwest’s unacceptable rate of cancellations and delays,” and vowed to “examine whether cancellations were controllable and if Southwest is complying with its customer service plan”.
Tesla Motors plunged 11.4% following reports that it cut production in China, adding to demand worries surrounding Elon Musk’s electric car company. With Tuesday’s move, Tesla stock has lost 69% of its value this year.
Beijing eased its strict Covid-19 curbs, which have battered the US$17 trillion economy, fueling hopes of a revival in global demand and an improving supply chain.
US-listed shares of Chinese firms including JD.Com Inc, Alibaba Group Holding Ltd and Pinduoduo Inc jumped between 1.4% and 4.9% after Beijing announced it was relaxing travel restrictions. – AFP, Reuters
Source: The Sun Daily
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