(New York) The New York Stock Exchange ended down Friday, upset by a bad indicator measuring the morale of American consumers and the offensive statements of a member of the Federal Reserve (Fed).
The Dow Jones fell 0.03%, the NASDAQ index lost 0.35% and the broader S&P 500 index dropped 0.16%.
“We were treated to a speech of firmness from the Fed”, which tensed the market, noted Peter Cardillo, of Spartan Capital.
Governor Michelle Bowman in fact estimated on Friday that if inflation remained high and the labor market “tight”, continued monetary tightening “would be appropriate” to curb soaring prices.
According to Michelle Bowman, the latest indicators did not provide “sustainable evidence” that “inflation (was) on a downward slope”.
To these remarks was added the unpleasant surprise of the consumer confidence index, measured by the University of Michigan, which emerged in May at its lowest level for six months.
The survey also revealed that consumers had revised their inflation expectations two years ahead to 3.2% from 3.0% in April, the highest level for this indicator since 2011.
Governor Michelle Bowman’s speech and this deterioration in inflation expectations, a parameter monitored like milk on the stove by the Fed, caused bond yields to jump.
The yield on 2-year US government bonds, considered a good barometer of the market in terms of monetary policy, stood at 3.98%, against 3.89% the day before closing.
The New York market was also still worried about the fate of American regional banks, two months after the start of the banking crisis in the United States.
Sometimes presented as the last weak link in the system, PacWest lost 2.99%, after having already melted by more than 80% since the beginning of March.
Other regional brands, such as Bank of Hawaii (-4.14%) or Comerica (-2.14%), also ended in the red.
The session was an opportunity to take profits on several giant capitalizations in the technology sector which have been on the rise since the start of the year, in particular Amazon (-1.71%) and Apple (-0.54%) .
Still driven by its announcements on Wednesday on the integration of generative artificial intelligence into Google products, Alphabet pulled out of the game (+0.87%).
Despite the appointment of a new CEO at the head of Twitter, which the market hopes will allow Elon Musk to focus more on Tesla, the electric vehicle manufacturer ended down sharply (-2.38% ).
The News Corp press group was sought after (+8.67%), after publishing lower quarterly results, marked by a slowdown in advertising revenue, but above expectations.
Leading US solar panel maker First Solar (+26.48%) jumped after the US government released new information on the tax rebate scheme for companies that produce their equipment in the US.
The small biotech ARS Pharmaceuticals did even better (+77.88%), after an initial favorable opinion from the American Medicines Agency (FDA) for its Neffy spray. In the event of definitive authorisation, it would be the first emergency treatment not requiring an injection in the event of a violent allergic reaction.
The Toronto Stock Exchange
The Toronto Stock Exchange ended Friday’s session up slightly as the information technology sector limited its gains, while major US indices ended the day lower.
The Toronto floor’s S&P/TSX Composite Index rose 2.01 points to 20,419.62 points.
“Looks like another week where the markets remain in a tight range. We are seeing downward pressure to close out the week, but nothing too significant,” observed Angelo Kourkafas, senior investment strategist for the firm Edward Jones.
This downward pressure, especially on tech and growth stocks, is tied to rising yields, Kourkafas said.
Yields are up after a University of Michigan consumer sentiment survey reported an unexpected rise in long-term inflation expectations, he said. That, coupled with lingering uncertainty around the US debt ceiling, is weighing on markets and pushing yields higher, he continued.
Headlines over the debt ceiling are likely to continue to be front and center next week, Kourkafas said, as the 1er June for an agreement.
“We could see a bit more anxiety related to this issue,” he said.
Besides the consumer survey, which on a monthly basis can be relatively volatile, the week saw encouraging economic news on US jobs and inflation, Kourkafas argued. There’s still a cycle of data releases ahead of the Federal Reserve’s June meeting, but barring a drastic change, the central bank will almost surely pause interest rate hikes, he predicted. .
“We are in this mode where there is enough encouraging data, but at the same time, headwinds ahead. Investors are therefore cautious to go one way or the other,” Kourkafas said, adding that volatility could accelerate in the coming weeks.
Meanwhile, Canada will release its April inflation data on Tuesday, offering another look at how the Bank of Canada’s fight against rising costs is faring after a few months of flat interest rates. ‘interest.
In the currency market, the Canadian dollar traded at an average rate of 73.89 cents US, down from 74.20 cents US on Thursday.
On the New York Commodity Exchange, crude oil fell 83 cents US to US$70.04 a barrel, while natural gas rose 8 cents US to US$2.27 a million. of BTUs.
The price of gold erased 70 cents US to US$2,019.80 per ounce and that of copper rose 2 cents US to US$3.73 per pound.
The Canadian Press