(New York) The New York Stock Exchange ended up Friday, at its highest in a month, overcoming alarming echoes of the banks on the American economy, thanks to an indicator which signals that the morale of American consumers is improving.
The Dow Jones rose 0.33%, the NASDAQ index gained 0.71% and the broader S&P 500 index gained 0.40%.
The NASDAQ chained a sixth consecutive rising session and the three indices ended at their highest level for a month.
The session had started in the red on a market tense by the communication of several large American banks on the state of the economy and its prospects.
The four major financial institutions that opened the earnings season on Friday all did better than analysts expected.
However, investors initially retained the increase in provisions for bad debts, a sign of a deterioration in the economy, and rather pessimistic comments.
JPMorgan Chase (+2.52%) is now banking on a “moderate recession”, while the CEO of Bank of America (+2.20%), Brian Moynihan has reported to him a “slowing economic environment more more marked”.
Wells Fargo (+3.25%) and Citigroup (+1.69%) also saw their provisions increase, the second justifying them by “a deterioration in macroeconomic forecasts”.
Investors also noted that consumers were using their credit cards more, according to banks, raising fears of an increase in delinquencies.
But after this bad initial impression, “the market recovered with the publication of the consumer confidence index”, based on a monthly survey by the University of Michigan, explained, in a note, Edward Moya, from Oanda.
The index stood at 64.2 points in January, well above December (59.7) and economists’ expectations (60.7).
Operators also welcomed the evolution, according to the same survey, of consumer inflation expectations, which see it at 4% in one year, against 6.5% currently.
Wall Street’s slight bout of weakness at the start of the session “was seen as a buying opportunity”, deciphered Patrick O’Hare, from Briefing.com, for whom the New York market continues to benefit from momentum. bullish.
The operators also relativized, in a second time, the speech of the banks. We are preparing for a moderate recession, “but not for a hard landing”, underlined Patrick O’Hare.
The S&P 500 ended Friday above an important technical threshold, namely the average of the last 200 trading days.
To go further, we will need satisfactory business results, warns Art Hogan, of B. Riley Wealth Management.
“Next week, attention will be focused solely on this” as well as on the forecasts of these companies for the coming months, announces the analyst. “We will be able to assess whether or not our estimates are close to reality. »
Among the companies that were part of the first wave of results was also Delta Air Lines (-3.54% to $38.20), which also did better than analysts expected.
The title was nevertheless shunned by operators, disappointed by the company’s forecasts for the first quarter, which includes an increase in non-fuel costs, linked to salary increases.
Elsewhere on the coast, Tesla came under attack again (-0.94% to $122.40), after lowering prices for most of its models in the US and Europe.
The manufacturer has cut the price of its Model Y by nearly 20%. The decision must in particular allow American buyers to benefit from the reductions provided by the government to promote the development of electric cars in the United States.
This Tesla initiative penalized the entire automotive sector, from General Motors (-4.75%) to Ford (-5.29%), via another electric vehicle specialist, Rivian (-6.43%).
The health insurer UnitedHealth (-1.23% to 489.57 dollars), the first weighting of the Dow Jones, was shunned despite results exceeding expectations and the confirmation of its forecasts, in a favorable context for the technology sector and stocks of growth.
Bond rates rose after the release of the University of Michigan survey. The yield on 10-year US government bonds stood at 3.49%, against 3.44% the day before.
The Toronto Stock Exchange
The Toronto Stock Exchange advanced nearly 150 points on Friday thanks to widespread gains, while the major American indices also rose.
The Toronto floor’s S&P/TSX Composite Index climbed 148.90 points to end the session with 20,360.10 points. Over the whole week, it accumulated an increase of 2.8%.
For the week as a whole, the Dow Jones gained 2.0%, while the S&P 500 rose 2.7% and the NASDAQ rose 4.8%.
Markets opened lower on Friday but rallied throughout the day, observed Ian Chong, associate portfolio manager for First Avenue Investment Counsel.
That’s likely because the big US banks opened earnings season on Friday with decent numbers but a lackluster outlook, Chong said. However, in conference calls about their results, their top bosses talked about consumer resilience, which helped reassure investors, he continued.
“I think it brought a lot of ease to the market,” he said.
JPMorgan bank, for example, has called for a “mild” recession this year.
Market sentiment on Friday, much like messaging from big bosses, was cautiously bullish, Chong said.
“The consumer is still in a very strong balance sheet position when it comes to deposits. So even if they spend a bit more, as interest rates continue to rise, they can get away with it,” he said.
Next week, retail sales data will be released in Canada and the United States, which will provide insight into how the consumer has fared during the holiday shopping season (Canada’s data on the retail trade will cover the month of November). Retail sales are expected to decline on both sides of the border, Chong predicted.
In Canada, all eyes will be on the inflation data ahead of the Bank of Canada’s interest rate decision the following week. Economists generally expect a 25 basis point hike in the key rate.
In the currency market, the Canadian dollar traded at an average rate of 74.59 cents US, down from 74.75 cents US on Thursday.
The Canadian Press