(New York) The New York Stock Exchange ended down on Friday, unable to shake off the impression left by the communication from the Federal Reserve (Fed), which pushes part of the market to fear for the American economy.
The Dow Jones lost 0.31%, the NASDAQ index lost 0.09% and the broader S&P 500 index returned 0.23%.
“The market has set its record straight, […] and this vision of higher rates for longer weighs on stocks and their valuation,” commented Kurt Spieler of FNBO.
The session had, however, started in the green, on what seemed a technical rebound, stimulated by a decline in bond rates, which had risen to record highs. The yield on 10-year US government bonds thus fell to 4.43%, compared to 4.49% the day before at closing.
“Initially, brokers were hoping to see buying pick up,” said Steve Sosnick of Interactive Brokers. “We could have expected a start after two bad sessions, especially yesterday. But the momentum faded. »
The approach of the weekend did not help, argues the analyst. “People didn’t want to stay in a buying position” as the two-day pause could lead to a sharp and uncertain reaction on Monday.
The offensive statements of a Fed governor, Michelle Bowman, drove home the point already driven by the Fed on Wednesday. The official said she expected another rate hike in the coming months.
The president of the Fed branch in Boston, Susan Collins, echoed him by assuring that “a further tightening (was) clearly not ruled out”.
The day’s indicators confirmed the impression of an American economy which refuses to bend, which is likely to push the Fed to remain mobilized against inflation.
In the United States, the composite PMI index (all sectors combined) thus highlighted an expanding American economy (50.1 points, above the 50 which indicates stability), even if its pace is slowing.
“The risk is increasing of seeing them cause a forced landing of the economy,” according to Steve Sosnick, which is making the New York market nervous.
On the stock market, Ford rose (+1.89%), after the president of the UAW automobile union, Shawn Fain, reported “real progress” in negotiations on a new collective agreement, while the strike has been going on for a week.
“At GM (-0.40%) and Stellantis (+0.10%), it’s a different story,” added the manager, who announced work stoppages in 38 spare parts distribution centers.
The news of this breakthrough at Ford worked against Tesla (-4.23%), often considered the big potential winner of a long strike.
Activision was sought after (+1.70%) after the British Competition Authority, the CMA, considered that the sale, by the video game publisher, of online gaming rights to French Ubisoft, “responded to previous concerns and opened the way to its acquisition by Microsoft (-0.79%).
Amazon (-0.16%) did not benefit from the announcement of the addition of advertisements to the Prime Video service. Subscribers who want unclaimed content will have to pay $2.99 per month.
Arm recorded a sixth session of negative growth in a row (-1.61%), after a first jump (+24.69%) for its first day of trading, September 14. The title, which is now worth $51.32, is approaching its IPO price ($51), below which it briefly fell on Thursday.
After initially experiencing the announcement of the resignation of its emblematic boss, Rupert Murdoch, on Thursday, the media group Fox Corp lost 2.50%. The other branch of the Australian-born tycoon’s empire, News Corp, lost 1.20%.
Toronto closes with a decline of more than 400 points
The Toronto Stock Exchange closed Friday’s session with a slight decline, the day after a tumble of more than 400 points, while the major American indices also fell.
It was Wall Street’s worst week in six months, but it ended with a whimper rather than a bang, as Treasury yields weakened slightly and investors continued to digest new Treasury projections. US central bank on the economy and interest rates.
In New York, the Dow Jones industrial average fell 106.58 points, or 0.31 percent, to 33,963.84 points, while the broader S&P 500 index lost 9.94 points, or 0.23%, to 4320.06 points. The NASDAQ Composite Index for its part depreciated by 12.18 points, or 0.09%, to 13,211.81 points.
The Toronto trading floor’s S&P/TSX composite index lost 11.65 points, or 0.06%, to end the day with 19,779.97 points.
The U.S. Federal Reserve held its key interest rate on Wednesday, but indicated rates could remain high for longer amid a surprisingly resilient economy. Markets were choppy for most of the week, notably falling after the Fed’s announcement.
The big question now is not how high rates will rise, but how long they will stay high, said Brianne Gardner, wealth manager at Velocity Investment Partners at Raymond James.
Many investors, as well as the Fed itself, thought the economy would have weakened further by now, she noted. But it’s important to keep in mind that the economy is operating with some lag and data shows signs of weakening in areas such as consumer spending and debt.
“Seeing this decline or movement suggests that this year’s market rally was perhaps based on unrealistic expectations,” she noted, referring to the tech-fueled gains that dominated the first half of 2023 .
On Friday, Statistics Canada reported that retail sales rose 0.3% in July. The federal agency, however, indicated that its preliminary data for the month of August suggested a decline.
Meanwhile, in the United States, an S&P Global report showed slowing momentum in the services sector.
As investors look ahead to the “home stretch” of the year, Mme Gardner expects volatility and some rotation toward safer investments.
“I think some investors may be considering buying growth stocks if interest rates remain high,” she said.
On the currency market, the Canadian dollar traded at an average rate of 74.27 US cents, up from 74.15 US cents on Thursday.
On the New York Mercantile Exchange, the price of crude oil rose 40 US cents to US$90.03 per barrel, while that of natural gas rose 4 US cents to US$2.88 per million barrels. BTUs.
Gold prices gained US$6.00 to US$1,945.60 per ounce and copper prices were unchanged at US$3.70 per pound.
The Canadian Press