(New York) The New York Stock Exchange ended lower on Friday, hurt by disappointing corporate results and taken aback by a much higher than expected US job creation figure, raising fears of further rate hikes directors.
The Dow Jones fell 0.38%, the NASDAQ index lost 1.59% and the broader S&P 500 index lost 1.04%.
Wall Street jumped on reading the monthly report on US employment, which revealed 517,000 job creations in January, nearly triple the projections of economists (187,000).
The unemployment rate fell to 3.4%, its lowest level since 1969.
“Traders fear that the Fed’s (US central bank) journey to price stability will take longer than anticipated, or even longer than the Fed itself thought,” commented Quincy Krosby of LPL Financial. .
The jobs report was followed by another indicator, the ISM services activity index, which rose 55.2% in January from 49.2% in December.
The two macroeconomic benchmarks on Friday “offer the Fed flexibility to continue raising rates,” said Daniel Vernazza of UniCredit in a note.
Operators now expect two increases of a quarter point each in March and May, at the next two central bank meetings, before a break, while they have so far favored a single increase by the summer. .
The sequence catapulted bond rates. The yield on 2-year US government bonds, which reflects the market’s view of monetary policy more than the 10-year rate, rose to 4.28% from 4.10% the day before closing.
The prospect of more marked monetary tightening poses the threat of a sharp deceleration in the economy, unfavorable to equities.
If the slowdown is slow to fully materialize in the United States, the New York market can already see its effect in the publications of companies, many of which are at half mast.
The three technology giants which published their quarterly results on Thursday thus all posted a net profit below analysts’ forecasts.
Amazon (-8.43% to 103.39 dollars) suffered from the slowdown in its remote computing activity (cloud computing), which had been driving the performance of the Seattle group for several years.
Alphabet (-3.29% to 105.22 dollars) suffered from the darkening of the online advertising market, the YouTube video platform (-7.7%) being particularly affected.
Apple (+ 2.44% to 154.50 dollars) did well, analysts attributing its failure in the last three months of 2022 to the setbacks of its main iPhone assembly plant in Shengzhou (China) , victim of an outbreak of COVID-19 cases.
Elsewhere in the tech sector, semiconductor maker Qualcomm (-0.61% to $135.02) also missed the target last quarter, and expects an even steeper deceleration at the start of the year.
But the disappointments were not limited to the new economy.
Ford was penalized (-7.61% to 13.23 dollars) for its quarterly results below expectations, penalized by supply problems and cost increases.
As for the Starbucks coffee chain (-4.44% to 104.30 dollars), it certainly achieved record sales in the first quarter of its staggered fiscal year (October to December), but below analysts’ projections. .
Despite this avalanche of indigestible news for investors, the indices limited their losses at the end of the session.
“Seeing some profit taking in a market that has gained 15%” since the start of the year (for the NASDAQ), is not necessarily unreasonable,” explained Angelo Kourkafas of Edward Jones.
Friday’s indicators “don’t call into question that inflation is slowing,” he said. However, they testify to a healthy job market” which takes us away from the worst “economic” scenarios in 2023.
The Toronto Stock Exchange
The Toronto Stock Exchange closed slightly higher on Friday, after a session that was marked by the publication of better than expected data on the United States labor market. The major US indices have also retreated, investors betting on further increases in interest rates.
Much-anticipated jobs data showed the United States added 517,000 jobs, well above the 187,000 expected, bringing the country’s unemployment rate to its lowest level in more than 50 years.
The strong report suggests the US Federal Reserve will need to extend its run of interest rate hikes, said Anish Chopra, managing director of Portfolio Management.
“The impact would be a continued rise in rates, and interest rates will be higher for longer. »
The news, coupled with disappointing results released this week by some of North America’s biggest tech companies, helped push markets into the red.
The Toronto Stock Exchange’s S&P/TSX Composite Index climbed 17.90 points to end the day at 20,758.34 points.
The energy, financials and telecommunications sectors ended higher, while others, such as utilities, health care and base metals, retreated.
U.S. markets were under pressure as quarterly corporate results began to take a hit from efforts to slow the economy, though those efforts have yet to show up in jobs numbers, Mr. Chopra.
The still strong US economy is signaling more rate hikes south of the border, at a time when the Bank of Canada has signaled a likely pause in its own tightening cycle, putting pressure on the loonie.
In the currency market, the Canadian dollar traded at an average rate of 74.68 cents US, down from 75.12 cents US on Thursday.
The price of gold plunged US$54.20 to US$1,876.60 an ounce and that of copper fell 3.5 US cents to US$4.07 a pound.
The Canadian Press