(New York) The New York and Toronto stock markets ended lower on Friday, hurt by a few disappointing corporate results and poor indicators, two reminders that the economy is decelerating.
Updated yesterday at 5:38 p.m.
The Dow Jones fell 0.43% to 31,899.29 points, the NASDAQ index fell 1.87% to 11,834.11 points and the broader S&P 500 index fell 0.93% to 3961. 63 dots.
The Toronto Stock Exchange ended a five-session bull streak on Friday, due to a broad decline that affected its largest sectors, but it still had its best week in more than a year. year.
The Toronto floor’s S&P/TSX Composite Index fell 79.93 points to 18,982.92 points. Despite everything, it ends its week with a gain of 3.2%, recording its best weekly performance since February 2021. The flagship index has advanced by 0.6% since the beginning of July, but has accumulated a decline of 10, 6% so far in 2022.
“It’s been a great week and we’ve seen a good rebound, and I think what really fueled the markets this week was the start of the earnings season,” said Lesley Marks, Chief Investment Officer at Investments. Mackenzie.
While the results largely come from U.S. companies, they impact sentiment toward Canadian stocks by association, she said.
“And I think in reality, we saw some corporate earnings data that wasn’t as bad as expected. »
On Friday, Canada’s information technology sector retreated 2.5% under the influence of weakness south of the border. The title of Shopify ended a good week in the Canadian market, losing 7.3% on Friday.
Toronto’s energy sector retreated on Friday as oil prices hit their lowest level in more than three months.
“The energy sector, like most natural resources groups, is juggling a potential economic slowdown or recession, so the big names in commodities are sitting well off their highs,” Ms.me Marks during an interview.
The materials sector fell, despite higher prices for some metals.
In the currency market, the Canadian dollar traded at an average rate of 77.66 cents US, up from 77.55 cents US the previous day.
South of the border
On the New York Commodities Exchange, crude oil prices fell US$1.65 to US$94.70 a barrel, while natural gas rose 38 cents US to US$8.20 a barrel. million BTUs.
The price of gold rose US$14.00 to US$1,727.40 per ounce and copper rose 5.1 cents US to US$3.35 per pound.
“The market is digesting the results of companies for the week,” explained Angelo Kourkafas of Edward Jones.
During the week, “we had Netflix and Tesla which were less bad than expected, but then we had disappointments on the technology side,” he added.
Snap (-39.08% to 9.96 dollars), parent company of the social network Snapchat, thus left the road, with a loss almost tripled and a gloomy speech on advertising.
The firm with the little ghost has taken other social networks with it, from Meta (-7.59%) to Pinterest (-13.51%), via the future listed vehicle of Donald Trump’s Truth Social platform ( -3.04%).
By extension, companies also dependent on advertising, such as Alphabet (-5.81%) or the digital marketing platform The Trade Desk (-7.30%), also suffered.
Although it also missed analysts’ forecasts, Twitter was spared (+0.81% to 39.84 dollars). The market preferred to retain the increase in the number of active users, considered encouraging given the context and the dispute with Elon Musk.
So far, “even if the results were not staggering, they were good enough” to support the indices, according to Angelo Kourkafas.
For Nick Reece, of Merk Investments, Snap’s results were “a reminder” of the difficulties awaiting the technology sector, between the rising cost of credit, persistent supply problems and an economic slowdown.
Therefore, “concern for the results of technology next week”, with Amazon, Apple, Microsoft and Meta, “weighs on the market”.
Among the few other failures, the steelmaker Cleveland-Cliffs (-8.87%), whose profit came out below forecasts, or the telephone operator Verizon (-6.74%), which revised downwards her goals.
In an unfavorable environment for technology and growth stocks, so-called defensive stocks, less sensitive to the economic situation, were favored by investors, including McDonald’s (+0.21%), Johnson & Johnson (+0.47% ) or Procter & Gamble (+1.60%).
The market was also “weighted by macroeconomic indicators”, according to Nick Reece, mainly a series of PMI activity indices, in particular its composite version for the United States. The latter came out at its lowest level since June 2020.
“The recession talk is back,” the analyst explained.
As a result, operators see the US Central Bank (Fed) pausing in its rate hike cycle in December, after a 0.75 point hike in July, then two hikes of half a point each in September. and November.
“We see more and more signals showing that the peak of inflation is behind us,” said Angelo Kourkafas.
This sentiment explains the sharp contraction in bond yields on Friday, with investors seeing the Fed less aggressive than expected in its monetary tightening.
The yield on 10-year government bonds fell to 2.75%, its lowest level in almost two months, from 2.87% the previous day.
In addition to the result of the results and the meeting of the Fed, Wall Street will follow, next week, the first estimate of the Gross Domestic Product (GDP) US, which could show a contraction in the second quarter.
A decline would technically put the United States into recession, after an initial decline in the first quarter.
On the odds, the toymaker Mattel fell (-7.12% to 22.45 dollars) despite better than expected results. The doll business has seen a downturn, especially Barbies.
American Express was sought (+1.88% to 153.01 dollars) after the publication of better than expected results, supported by the recovery in tourism, but also business travel. The credit card specialist also raised its growth targets for the full year.
With The Canadian Press