The DOW JONES Ind Average fell 0.29% at the opening to mark 34,397 points, while the S&P 500 left 0.15% and mark 4,474 integers. The NASDAQ 100, for its part, managed to rise 0.23% to 13,927 points.
The day continues to be marked largely by the hangover from the minutes of the Fed meeting, known yesterday, which showed that the institution’s efforts to curb inflation will include a plan to reduce the balance by more than a billion dollars a year. Investors are concerned that the Federal Reserve could slow the economic recovery as it steps up the campaign to quell runaway inflation.
“The reality is that we are in uncharted waters and the Fed has the difficult task of undoing the tremendous monetary support of the last two years,” adds Allianz Investment Management senior investment strategist Charlie Ripley in a note. “Against this backdrop, it is highly conceivable that uncertainty in the path of monetary policy remains embedded in the markets and that is exactly what we have been witnessing with the recent moves in interest rates and risk assets.”
The 10-year Treasury bond yield rose today to 2.63%.
Investors have also known before the opening that initial applications for unemployment benefits fell last week to its lowest level in more than 53 years (November 1968), as reported by the Department of Labor. Specifically, the initial requests fell to 166,000, well below the 200,000 that the market had predicted and 5,000 less than the figure for the previous week, which was revised downwards.
However, the figures reflect a labor market subject to a serious shortage of workers: there are about five million more jobs than available workersa situation that can push up wages and further contribute to the spiral of inflation.
Meanwhile, commodity markets continue to be hit by disruptions caused by Russia’s war in Ukraine. The reference Brent oil in Europe is close to 102 dollars per barrel, while the American West Texas is paid at 97.27 dollars. Black gold rises again like this, rebounding from the drop caused by the decision of the International Energy Agency to release 60 million barrels of emergency reserves.
Furthermore, according to a report from JP Morgan Chase, the worst for commodity markets is yet to come. Experts at the US bank believe commodities could jump as much as 40% – taking them into record territory – if investors increase their allocation to commodities at a time of rising inflation.
HP shoots up more than 15% on opening
On a more strictly business level, the technology sector continues to be in the eye of Wall Street’s information storm. If in previous days the protagonist was Twitter, today the eyes turn to HP after learning that Warren Buffett, through his vehicle Berkshire Hathaway, has acquired a package of 120.95 million shares of the American manufacturer of personal computers and printers.
The purchases were made between last Monday and this Wednesday, according to SEC records. Shares of HP, which yesterday closed down 2.97% to $34.91, soar 10% at market open. The acquisition of this stake in HP represents the third transaction for several billion dollars made by Berkshire in just one month, after the purchases of the insurer Alleghany for 11,600 million dollars (10,638 million euros) and Occidental Petroleum for more than 7,500 million dollars (6,878 million euros).
Shares of HP, which yesterday closed down 2.97% to $34.91, soar 10% at market open.
Increases, although more moderate (1.8%), for Levi Strauss Rg-A. The textile manufacturer has surprised the market with better than expected first quarter results, while reaffirming its objectives for 2022 provided that there is no significant worsening of inflationary pressures.
Levi made a net profit of $196 million, or 48 cents a share, compared with 35 cents a share a year earlier. Excluding one-off items, he earned 46 cents a share, better than the 42 cents analysts had expected. Revenue rose 22% to $1.59 billion, also beating expectations of $1.55 billion.
As far as analysts’ recommendations are concerned, bad news for Ford Motor, which receives a recommendation cut by analysts at Barclays, justifying the move due to problems in the supply of chips and the rate hikes of the Fed. The car company fell 1.8% at the opening after leaving 2.7% yesterday.
Meanwhile, Rite Aid shares plunge 18% after Deutsche Bank cut the pharmacy operator’s recommendation to ‘sell’ from a previous ‘hold’. Experts at the German bank think that Covid-19 accelerated the decline of the retail pharmacy segment, and that there is a possibility that Rite Aid will not be able to generate enough profit to continue as an operating company.
Meanwhile, Twitter continues to give something to talk about after Elon Musk has admitted that his investment in the technology is not passive and that he started buying the shares as early as January. Musk revealed on Monday morning that he had bought 9.2% of Twitter’s outstanding shares, but did so on a 13G form suggesting the investment was passive, meaning he would not seek a change in the company. . On Tuesday afternoon, he filed a 13D form, used more often by activist investors, detailing a deal the tycoon had with the social media company.
The new filing requires more information, and it shows that Musk began accumulating Twitter shares on January 31, buying more than 620,000 shares. From there, he bought shares of Twitter in every available trading session through April 1, with total daily shares bought ranging from 371,075 on February 15 to more than 4.8 million shares on February 7.
Investors should also note today that US Treasury Secretary Janet Yellen will speak again before the House of Representatives. Yesterday Yellen already warned that Russia’s war in Ukraine will cause “enormous economic repercussions around the world”, including interruptions in the flow of food and energy.