The Dow Jones fell 0.61%, the Nasdaq index lost 1.68% and the broader S&P 500 index dropped 1.11%.

While the New York market was still digesting the words of Fed Chairman Jerome Powell on Tuesday, another member of the institution drove home the point on Wednesday.

The president of the New York branch John Williams has mentioned a key rate between 5.25% and 5.50% at the end of the year, which would mean, at a minimum, a triple increase of a quarter of a point each times by summer, and no decline until December.

However, a week ago, investors were betting on a single rise, followed by two declines.

Jerome Powell had already ruled out any rate cut before 2024 on Tuesday.

"They're going to keep rates too high," commented Jack Ablin of Cresset Capital, "and that's going to put pressure on corporate earnings, which react much faster to monetary tightening than inflation does."

The bond market reflected the general impression well.

The yield on one-year US government bonds, which reflects medium-term monetary policy expectations, rose to 4.87%, a first in almost 22 years.

At the same time, the 10-year rate fell to 3.61%, from 3.67% at the close on Tuesday, a sign that Wall Street expects a sharper medium-term slowdown in the US economy than before. .

Wall Street was also scalded by the cautious projections of several companies, in particular the specialist in telecommunications infrastructure Lumen.

Most of the giants of the technology sector have disappointed this season and the social plans are linked to deal with the deterioration of the economy.

The prospect of high rates for an extended period is unfavorable to technology and growth stocks which depend, more than others, on credit conditions to finance their rapid development.

Amazon (-2.02%), Meta (-4.27%) or semiconductor manufacturers AMD (-1.42%), Qualcomm (-3.26%) and Texas Instruments (-3.81% ) thus all paid the price on Wednesday.

Even Microsoft (-0.31%) suffered a downpour despite its announcements the day before, with the integration of the ChatGPT conversational robot into its Bing search engine.

As for Alphabet (-7.66%), it was doubly penalized by the general gloomy mood and by fears that Microsoft would threaten Google's supremacy in the search engine sector.

In this context of uncertainty, caution was called for.

It benefited so-called defensive values, that is to say theoretically less sensitive to the economic situation, such as Johnson & Johnson (+0.13%) and the Merck laboratory (+0.91%).

Wall Street hailed Uber's results (+5.53%), above its expectations.

New York-listed English football club Manchester United (+10.51%) gained momentum after several British media reported that the Emir of Qatar Tamim bin Hamad Al Thani could soon make a takeover bid .

The video game publisher Activision Blizzard (-3.58%) suffered from the conclusions of the British competition regulator (CMA), which on Wednesday expressed reservations about its takeover by Microsoft announced more than a year ago.

The New York Times was sought after (+12.04%) after results above expectations, driven by the success of bundled offers, which include several subscriptions to different products.

© 2023 AFP