FRANKFURT/NEW YORK, Dec 27 (Reuters) – Losses in the tech sector hit Wall Street. Crucially, concerns over US electric car maker Tesla’s production in Shanghai have offset the excitement after the recent easing of quarantine in China. The Dow Jones.DJI standard values index closed up 0.1% on Tuesday at 33,241 points. The tech-heavy Nasdaq.IXIC, on the other hand, fell 1.4% to 10,353 points. The broad S&P 500.SPX lost 0.4% to 3829 points.
At Tesla’s Shanghai factory, assembly lines are expected to shut down for the most part in December and January. Tesla did not give a reason for this. At the end of 2021 and 2022, the electric car manufacturer did not take long breaks in production. Demand for Tesla cars in China, the world’s largest auto market, has recently declined. In the first nine months of the year, more than half of all new Tesla cars worldwide came from the auto plant, which had about 20,000 employees. Shares of the automaker fell more than eleven percent. Rivals RivinRIVN.O and LucidLCID.O each lost more than seven percent.
INTEREST RATE SPECULATIONS AFFECT BONDS
Government bonds were hit by speculation about the US Federal Reserve’s future monetary policy following the recent easing in China. The yield on the 10-year bond US10YT=RR jumped to 3.843% from 3.747% the previous day. Investors assume that the world’s second largest economy will soon pick up speed. China is an important trading partner for the United States and a stronger economy on the back of rising exports could prompt central banks to make further significant interest rate hikes. However, analysts point out that the recovery could still be stalled. “The situation in China is likely to get worse before it gets better. It also makes breaking news a mixed signal,” said Aoifinn Devitt, chief investment strategist at Chicago-based wealth management adviser Moneta.
CASINO OPERATORS AND CHINESE VALUES IN DEMAND
High bond yields hurt technology stocks. Logs from Apple, Amazon and graphics card maker Nvidia lost as much as 7.1%. Rising inflation and rising interest rates will devalue the future earnings of these high-growth companies, experts say.
Meanwhile, U.S.-listed Chinese internet stocks such as Pinduoduo and JD.Com rose 1.4 and 4.2 percent, respectively. The hope of a wave of tourists from China has also inspired American casino operators. Las Vegas SandsLVS.N, Wynn ResortsWYNN.O and Melco Resorts & EntertainmentMLCO.O jumped 8.1%. Gambling is banned in the People’s Republic with few exceptions, which drives Chinese casino fans to the United States.
Weather-related flight cancellations and delays over the Christmas weekend hit Southwest AirlinesLUV.N. Shares of the US airline fell nearly 6%. Of the more than 3,800 U.S. air flights canceled on Monday, 2,800 were attributable to Southwest. This affected almost 70% of all the airline’s flights scheduled for that day.
|T-bonds||Price Update||absolutely change||Performance Update||Return the day before|
Statistics for Nyse and Nasdaq
|Number of shares traded in millions||656||3,754|
|Number of shares with price gains||1,942||1,588|
|Number of shares with price losses||2,292||3,070|
|Number of unchanged values||213||413|
US Dow Jones index closes in positive territory
Symbolic photo: Image by Reto Keller on Pixabay
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