(New York) The New York Stock Exchange ended higher on Friday, recovering after a turbulent week for technology stocks, thanks in particular to a rotation towards neglected stocks.
The Dow Jones Industrial Average rose 1.64%, the NASDAQ Index gained 1.03% and the broader S&P 500 Index recovered 1.11%.
After two sessions marked by a correction in the technology sector, Wall Street was ready for a rebound.
It was facilitated by the publication, before the opening, of the PCE consumer price index, which came out at 2.5% over one year in June, compared to 2.6% in May.
Inflation continues to slow and is slowly approaching the Fed’s target [banque centrale américaine]or 2% per year.
Jeffrey Roach of LPL Financial
“At the next meeting, the Fed should emphasize that the deceleration in employment is sufficient reason to cut rates in September,” he added.
“We are still seeing inflation moderating, with growth still solid,” as evidenced by the 2.8% increase in GDP in the second quarter at an annualized rate, argued Angelo Kourkafas of Edward Jones.
“This is consistent with the scenario of a soft landing” for the American economy, which delights the New York Stock Exchange.
In the wake of this, bond rates eased. The yield on 10-year US government bonds stood at 4.19%, compared to 4.24% the previous day at the close.
Beyond the daily indicators, “the context remains that of a rotation that continues,” recalled Angelo Kourkafas. “Even if technology has rebounded today, we see small values and [secteurs sensibles à la conjoncture et aux taux] to stand out.
After crowding in on a handful of tech giants in the first half of the year, investors have begun to diversify their holdings and look more closely at the rest of the market.
The Dow Jones thus did better on Friday than the NASDAQ or the S&P 500, thanks in particular to financials such as Visa (+2.25%), American Express (+2.38%) and Goldman Sachs (+1.49%).
The Russell 2000 index, which only includes SMEs, did even better (+1.67%).
The New York Stock Exchange is already looking ahead to next week, when Amazon, Meta, Microsoft and Meta reveal their quarterly accounts.
The current valuation of these groups “allows nothing but perfection” in the results, warns Angelo Kourkafas.
A slight disappointment from Alphabet and a misfire from Tesla on Tuesday were enough to send Wall Street skidding.
“Given that earnings overall remain up, the Fed is set to cut rates, and with the economy backsliding but still strong, a bout of weakness in tech giants may be partially offset by a rotation into other sectors,” Kourkafas said.
Elsewhere in the stock market, the Biogen laboratory plummeted (-7.15%) after the European Medicines Agency issued a negative opinion on the marketing of its treatment against Alzheimer’s disease.
Leqembi, developed by Biogen and Esai, was approved in July 2023 by the American Medicines Agency (FDA).
The cryptocurrency sector benefited from the rebound in bitcoin and ether, the two most traded digital currencies.
The cryptocurrency exchange platform Coinbase (+4.93%) and the “miner” (creator of digital currency) Riot Platforms (+4.38%) were in the spotlight.
TSX climbs more than 200 points
Broad gains pushed Canada’s main stock index higher on Friday.
The S&P/TSX composite index closed up 206.78 points at 22,814.81, led by metals, technology and health care stocks.
On the currency market, the Canadian dollar was trading at 72.31 US cents, compared to 72.36 US cents on Thursday.
The gold contract rose $27.50 to $2,381 an ounce and the copper contract lost one cent to $4.12 a pound.
The Canadian Press