(New York) The New York Stock Exchange ended higher on Monday, turning the test after Friday’s rebound into a market buoyed by rather satisfactory corporate results and the prospect of a possible deceleration from the American central bank ( Fed) at the end of the year.
Updated yesterday at 5:39 p.m.
The Dow Jones gained 1.34% to its highest in a month and a half, the NASDAQ index rose 0.86% and the broader S&P 500 index gained 1.19%.
“US equities advanced on the back of the idea that the Fed will step on the brakes after next week’s meeting,” said Edward Moya of Oanda.
After weeks of turbulence, bond rates stabilized on Monday. The yield on 10-year US government bonds stood at 4.24%, down from 4.21% on Friday.
However, the three-month rate, a close indicator that reflects short-term monetary policy expectations, crossed 4% for the first time in 15 years.
It is thus almost in line with the scenario of a further 0.75 percentage point increase in the Fed’s key rate at the next meeting, which would bring it to a range of 3.75% to 4%.
The PMI index of industrial activity in the United States came out sharply lower in October, at 49.9 points against 52.0 in September, at its lowest level for 28 months, i.e. at the start of the coronavirus pandemic.
As for the PMI index for the services sector, it too recorded a marked contraction.
These two indicators lend credence to the thesis that the US economy is in retrograde, which could prompt the Fed to change its course.
For Andy Kapyrin, of Regent Atlantic, the start of the earnings season is proving “less bad than the market expected”, which “fuels confidence” among investors.
The market has “hope that this crucial week for tech will also be good”, with publications from Microsoft and Alphabet on Tuesday, Meta on Wednesday, then Amazon and Apple on Thursday.
Before opening the ball, Microsoft (+2.12%) and Alphabet (+1.47%) were sought on Monday.
Despite these two consecutive sessions removed, Wall Street is not racing. “For me, this is a momentum against the tide,” says Nick Reece of Merk Investments. In the medium term, the market “will once again fall to its lows” of the year and “the economy will go into recession next year”, he announces.
On the stock market, the health sector stood out with, in the spotlight, the health insurer UnitedHealth (+1.47%), the biotech Amgen (+3.72%) or the pharmaceutical group Merck (+1, 72%).
Twitter (+3.27% to 51.52 dollars) approached a decisive week up for the platform.
The Delaware judge responsible for litigation with Elon Musk gave the entrepreneur until Friday evening to finalize the acquisition of the social network. “We continue to believe the transaction will occur this week,” Wedbush Securities analysts wrote Friday.
A sign that investors favor the hypothesis of a finalization of the takeover, the price of the group at the blue bird is now close to the price proposed by Elon Musk, or 54.20 dollars per share.
On the other hand, Tesla fell (-1.49% to 211.25 dollars), a rare value in the NASDAQ index to end in the red.
Some investors and analysts are worried about the possible sale of new titles by Elon Musk, managing director of the electric vehicle manufacturer, as well as possible interference from the Twitter file in the management of the group.
Chinese companies listed on Wall Street had a very bad day after Chinese President Xi Jinping’s reappointment on Sunday.
Alibaba fell 12.51% to $63.15, while JD.com (-13.02%) and Pinduoduo (-24.61%) also dipped. Same trajectory for Yum China (-13.96%), which controls the KFC, Taco Bell and Pizza Hut brands in China.
The Toronto Stock Exchange in the green
Canada’s main stock index was up, continuing Friday’s rally. US stock markets were also rising.
The S&P/TSX Composite Index in Toronto gained 57.45 points to 18,918.40 points.
There is a lot of hope that the Federal Reserve’s (Fed) aggressive rate hike cycle is coming to an end, believes Lyle Stein, president of Forvest Global Wealth Management.
We are still expecting the Bank of Canada to announce another major rate hike on Wednesday.
Canada is in a more precarious position than the United States due to its sensitivity to the housing market, Stein said. A 50-point rise this week may be too small to curb import-driven inflation, and a 75-point rise may hurt the property market, he said. “We’re in a bit of a pickle here. »
Economic data released on Monday showed that aggressive central bank tightening is starting to take its toll, wrote Candice Bangsund, vice president and portfolio manager at Fiera Capital, in an email.
She believes investors got a reprieve with reports last week that the Fed was considering a more modest rate hike in December after the expected 75 basis point hike in November.
Mr. Stein points out that the release of several quarterly results, including those of some of the largest technology companies, would arrive this week. This would measure the effect of inflation and central bank tightening on businesses, he said.
In the currency market, the Canadian dollar was trading at 72.88 cents US, down from its average price of 72.92 cents US on Friday. Concerns about the Chinese economy prompted investors to take refuge in the safe-haven currency that is the American dollar, explains Mr.me Bangsund.
The Canadian Press