(New York) The New York Stock Exchange ended a negative week at half-mast on Friday, weighed down by high bond rates and geopolitical risks before the weekend.
The Dow Jones index lost 0.86% to 33,127.28 points, the technology-dominated NASDAQ fell 1.53% to 12,983.81 points and the broader S&P 500 index fell 1.26%. at 4224.16 points.
Yields on 10-year Treasury notes briefly touched 5% in post-hours trading Thursday evening, the highest since July 2007. By 4:30 p.m. ET on Friday, they stabilized at 4.91 %.
“Investors do not want to take risks before the weekend while tensions remain high” in the Middle East on 14e day of the war between Israel and Palestinian Hamas, indicated Jack Ablin, investment strategy specialist at Cresset.
“While we are facing a wall of concerns, investors have shown little appetite to go beyond this wall in recent sessions,” commented Schwab analysts.
The ounce of gold, the ultimate safe haven, gained 0.56% to $1,991.60, after climbing during the session to a five-month high, just above $2,000 per ounce.
“Gold is doing well in this risk-averse environment,” said Jack Ablin for AFP.
Among the indicators, the American government revealed the annual budget deficit of the federal state which soared to 1,700 billion dollars for the 2023 fiscal year ending September 30.
The deficit thus widens by 23% due to a reduction in tax revenue, but also an increase in debt service, due to the rise in rates.
Massive issuance of new government bonds to repay the maturities of a still large deficit is often cited as one of the factors in the rise in yields on Treasury bills.
Investors also continued to weigh the words of Jerome Powell, the president of the American central bank (Fed), who on Thursday gave food for thought to both the hawks and the doves, that is to say for the supporters of high rates as well as those of a more flexible monetary policy.
“He stressed that it was imperative to return to sustainable inflation and that the road to achieving this would be long and unpredictable,” summarized Wells Fargo analysts.
As for company results, the general impression is mixed. “Companies manage to beat forecasts on their results, but not on their turnover,” noted Jack Ablin of Cresset.
“The growth in activity is not there. This is not a good recipe for profit expansion,” the analyst said.
On the value side, Tesla continued its fall (-3.69% to $211.99), dragging the NASDAQ down. The stock of Elon Musk’s group has fallen by almost 16% since the start of the week, due to disappointing quarterly results.
During an audio conference, Elon Musk also blamed at length the rise in interest rates which increases his production costs and hampers credit purchases of his vehicles.
The shares of other electric vehicle manufacturers were dragged into the red such as Rivian (-2.56%) or Lucid (-1.38%).
American Express, a Dow Jones heavyweight, lost 5.38% to $141.57 despite quarterly results better than expected. The group reported continued growth in consumer credit spending.
Stocks in the solar energy sector had a bad day, in the wake of the Israel-based group, SolarEdge Technologies (-27.27% to $82.90). He said he was facing a slowdown in the equipment installation market in Europe.
Other companies in the sector plunged like Enphase Energy (-14.68%) or Sunpower (-8.62%).
Toronto Stock Exchange
The Toronto Stock Exchange lost more than 1% on Friday, weighed down in particular by losses in the financial, telecommunications and base metals sectors, while the major American indices also fell.
The S&P/TSX composite index on the Toronto floor returned 233.17 points, or 1.21%, to close the session with 19,115.64 points.
On the currency market, the Canadian dollar traded at an average rate of 73.02 US cents, up from 72.91 US cents on Thursday.
The Canadian Press