(New York) Very volatile on Friday, the New York Stock Exchange reversed the trend of the last few days and ended up sharply in the wake of a sudden drop in bond rates, prompted by comments from members of the Fed.
Updated yesterday at 5:29 p.m.
The Dow Jones index concluded with a jump of 2.47% to 31,802.56 points, rising above 31,000 points for the first time in a month. The tech-heavy NASDAQ rose 2.31% to 10,859.71 points and the S&P 500 rose 2.37% to 3,752.75 points.
The indices had briefly started in the red then progressed slightly before accelerating sharply in the second part of the session.
“Wall Street banged its fist on the ‘buy’ button after reports that the Fed would soon be ready to discuss how to slow the pace of monetary tightening after the November Monetary Committee (FOMC) meeting,” summarized Edward Moya of Oanda.
Mary Daly, the president of the regional branch of the Central Bank of San Francisco, thus threw a stone into the pond on Friday: “we could end up with a new increase of 75 basis points” at the next meeting on November 2. , as the markets expect, she conceded, “but I would advise people not to expect it to be 75 basis points forever.”
“We have to make sure that we do everything in our power not to tighten (rates) too much and we can’t go back up too quickly and say, it’s over,” she added during the interview. a conversation at the University of Berkeley broadcast on the central bank’s website.
This new planned increase of three quarters of a percentage point in the rates on the federal funds would be the fourth in a row.
An article from wall street journal also echoed Fed officials reportedly beginning to signal a desire to slow rate hikes and end them early next year to see how economic activity fares.
Thus bond yields calmed down towards the middle of the session “following information according to which the Fed could decide on a lower rate hike” during its last monetary meeting of the year, the December 13 and 14, noted Wells Fargo analysts.
The retreating dollar
The rate on 10-year Treasury bills eased to 4.21% instead of 4.30% in the morning. Those at 30 years, which condition in particular mortgages, fell back to 4.31% instead of 4.36% earlier.
The dollar on the upward slope at the start of the session faltered sharply around 8 p.m. GMT: -0.94% to 111.82 points for the Dollar index which compares the greenback to a basket of currencies.
Rumors of Japanese intervention overnight to support the yen against the dollar by selling US Treasuries also played a role.
On the odds, Twitter fell 4.94% to 49.90 dollars, weighed down by information likely to affect the takeover of the social network by Elon Musk.
According to a Bloomberg report, the Biden administration is considering subjecting the Tesla boss’ takeover bid to a national security review.
The US government is reportedly concerned about the presence of foreign investors, including Saudi prince and businessman Al-Walid bin Talal and Qatar’s sovereign wealth fund, in the consortium from which Mr Musk has secured more than $7 billion. dollars to finance his operation. Tesla advanced 3.45% to $214.44.
Snap, the parent company of the Snapchat app, plunged 28.13% to $7.76 after reporting its weakest quarterly sales growth. The company had already announced this summer the elimination of 20% of its workforce.
Member of the Dow Jones, American Express sold 1.61% despite an increase in its turnover and its quarterly profit. The group has put more money aside in case consumers’ economic situation deteriorates.
COVID-19 vaccine makers Moderna (+8.40%), Novavax (+12.57%) and Pfizer (+4.80%) jumped after strong analyst ratings.
All sectors were in the green, driven by materials (+3.46%), banks and non-essential consumer spending (+2.92%).
Over the week, despite two sessions at half mast, the three indices had increased: 4.89% for the Dow Jones, 5.22% for the NASDAQ and 4.73% for the broader S&P 500 index.
The Toronto Stock Exchange closed Friday up nearly 300 points, boosted by gains in the base metals sector, while the major US indices also rose.
The Toronto floor’s S&P/TSX Composite Index gained 281.66 points to end the session with 18,860.95 points.
“This is the first Friday in several weeks where we have had positive returns,” observed Mike Archibald, vice-president and portfolio manager at AGF Investments.
“It’s a nice way to end what has been a pretty good week. »
Investors feel the end of the dynamic cycle of central bank rate hikes is near, he said.
“To the extent that interest rate increases begin to be less significant […], you have a chance to see stocks recover here. »
Next week will be crucial in setting the tone for the rest of the quarter, Mr. Archibald argued.
“We have a lot of (quarterly) results coming next week in the US and the Canadian market is also starting to really kick off. So we’re going to pay attention to what companies are telling us. »
Canadian National Railway Company and Canadian Pacific Railway will release their results next week. According to Mr. Archibald, these two companies are generally good indicators for the Canadian economy. Other major materials companies, as well as some utilities and Shopify, will all release financial data next week, he added.
“There will be a lot to chew on for investors,” he said.
In the currency market, the Canadian dollar traded at an average rate of 72.92 cents US, up from 72.84 cents US on Thursday.
Retail sales data for August showed slight gains on Friday, but it was accompanied by a preliminary estimate for September that raised fears of a pullback this fall.
Mr. Archibald explained that consumers are likely to tighten their purse strings as inflation continues on its upward path.
With The Canadian Press