The S&P 500 is down well over 3% so far this year, with investors remaining unexcited by solid earnings. The stock market, for once, seems to taking its cue from the forex markets instead, with prices being rattled by the sliding value of emerging-market currencies.
The Dow was dragged lower by AT&T, which fell 2% despite reporting better-than-expected earnings and revenue, alongside very low churn rates for its postpaid wireless subscribers. The drop in its share price demonstrates the pessimistic outlook that presides on Wall Street currently, with investors seeking out the negatives in each report. In this case, the full-year forecasts, which were lighter than had been forecast by analysts. It was a similar story with Boeing, which dropped 5% while also beating estimates with its earnings and revenue but disappointing with its forward guidance despite the strong fourth-quarter results.
As the stock market’s performance is a reversal of yesterday, so it is the same story in the forex market, where the safe-haven yen has rebounded after yesterday’s decline. Signs of stabilisation in emerging-market currencies yesterday had depressed demand for safe-haven instruments, but doubts are now back in the ascendancy about whether central banks are able to defend their stressed currencies. USD/JPY fell 0.81%, with the yen gaining against most commonly-traded currencies.
The focus this afternoon will be on the outcome of the FOMC meeting, with the announcement due to be made at 7pm GMT.