(New York) The New York Stock Exchange experienced a partial rebound on Tuesday after the previous day’s scares that shook global markets on fears of a slowdown in the American economy.
The Dow Jones Industrial Average, which had its worst session in two years on Monday, rose 0.76% to 38,997.66 points. The tech-heavy NASDAQ index climbed 1.03% to 16,366.85 points. The S&P 500 rose 1.04% to 5,240.03 points.
Bond yields rose to 3.88% for ten-year bonds from 3.78%, while the dollar recovered slightly against major currencies.
The day before, bond rates had fallen sharply due to fears of the prospect of a recession in the United States after the publication of worse-than-expected employment figures on Friday.
The Dow Jones had fallen 2.60%. The NASDAQ, at its lowest since May, had dropped 3.43% and the S&P 500 had returned 3.00%.
An important factor in stabilizing the markets on Tuesday, the yen stopped appreciating, at 145.01 yen per dollar around 3:35 p.m. (Eastern time) against 144.18 the previous day.
“It’s going much better than yesterday,” commented Jack Ablin of Cresset, stressing that Monday’s fall was partly due to “forced selling.”
“The source of these sales was the ‘carry trade’ movement where speculators borrowed yen to invest in mega-cap tech companies, but when the yen appreciated, they were forced to unwind these positions,” the analyst explained.
Michael Pearce of Oxford Economics said there had also been an “escalation” of fears of a recession in the United States after the publication of worse-than-expected employment figures for July on Friday.
“The market has overreacted to what is a steady weakening of employment data,” the economist said.
“We have reviewed our recession models in light of the state of the market and the data and we believe that while the risks have increased, they are still below the historical threshold,” predicting a recession, Michael Pearce added.
On the evolution of the market, Jack Ablin is more cautious. “I remain circumspect, because if it is a correction, there is still a way to go, the market remaining overvalued.”
On the stock market, the eleven S&P sectors closed in the green, led by the real estate sector (+2.25%) and banks (+1.53%).
Megacaps recovered, such as Nvidia (+3.78%), Amazon (+0.57%), Meta (3.86%) and Tesla (+0.88%).
Alphabet, Google’s parent company, stabilized (-0.06%) as the search engine was accused Monday of abuse of dominant position by the American justice system. The digital giant announced that it would appeal.
Construction equipment group Caterpillar was in demand (+3.02%) after a better-than-expected profit in the second quarter even though sales fell.
Intelligence firm Palantir soared 10.38% as it raised its full-year revenue target to $2.74 billion from $2.69 billion previously forecast.
Shares of ride-hailing giant Uber rose 10.93% as its quarterly revenue reached $10.7 billion, compared to expectations of $10.57 billion.
Social network Reddit closed down 4.28% and was down another 1.62% in after-hours trading despite better-than-expected results.
Toronto Stock Exchange
Canada’s main stock index was down more than 1% on Tuesday, while U.S. stock markets recovered after a disastrous Monday, when the Toronto Stock Exchange was closed for the holiday.
The S&P/TSX composite index lost 248.27 points to 21,979.36.
The Canadian dollar was trading at 72.50 US cents compared to 72.16 US cents on Friday.
Crude oil rose 26 cents to $73.20 per barrel, and natural gas rose seven cents to $2.01 per million BTU.
Gold was down $12.80 to $2,431.60 an ounce and copper was up three cents to $4.03 a pound.
The Canadian Press