(New York) The New York Stock Exchange ended lower on Friday, hampered by a higher-than-expected inflation indicator, which confirms that prices will take time to settle down.
The Dow Jones lost 0.90%, the NASDAQ index fell 0.70% and the broader S&P 500 index fell 0.73%. It was the ninth session of decline for the S&P 500 in 11 sessions.
Over one year, inflation is 7.4%, higher than the 7.2% expected, but significantly less than the 8.1% observed in October, also over one year.
However, “this should not change the trajectory of the Fed (US central bank) next week”, with an expected rate hike of half a point on Wednesday, commented Bill Northey, of US Bank Wealth. Management.
Wall Street then turned around after the publication of the University of Michigan’s monthly survey of American consumer sentiment.
For Edward Moya, of Oanda, investors have mainly paid attention to inflation expectations in the short term (one year), at their lowest in 15 months, at 4.6%, which may encourage the Fed to decelerate its monetary tightening .
But the general impression remains that while inflation is calming down, it is doing so slowly.
As a result, even if the pace of tightening could slow, the market is convinced that the Fed “will have to continue raising its key rate” in 2023, according to Bill Northey, which is unfavorable to the equity markets.
As a witness, the yield on 10-year US government bonds tightened to 3.58%, against 3.48% on Thursday.
Investors now favor the scenario of a key rate above 5% next June, at its peak.
On the side, Tesla has offered a rebound (+ 3.23% to 179.05 dollars), which has allowed its boss Elon Musk, to once again become the richest man in the world, according to the ranking in real time established by the site of Forbes magazine, with 188.7 billion dollars.
Netflix (+3.14% to 320.01 dollars) benefited from an increase in recommendation from Wells Fargo analysts, who expect a good 2023 vintage, thanks in particular to the rise of advertising.
In the general context of caution that weighed on Wall Street on Friday, speculative stocks like GameStop (-8.71%) or AMC (-6.65%) struggled.
The semiconductor manufacturer Broadcom reported (+ 2.57% to 544.72 dollars) after the publication of results above expectations on Thursday, and forecasts also above expectations for the current quarter, due to continued strong demand for remote computing (the clouds).
The sports equipment manufacturer Lululemon (-12.85% to 326.39 dollars), popularized thanks to its yoga pants, was sanctioned, despite the publication of a turnover and a net profit above expectations. Investors were offended by the group’s forecasts for the fourth quarter, considered cautious.
Chinese industrial fishing company Pingtan Marine Enterprise, listed on the NASDAQ, has been suspended from trading after the US Treasury announced sanctions against the group, accused of illegal fishing. The US assets of Pingtan and his boss, Xinrong Zhuo, have been frozen.
This is the first time that a NASDAQ-listed company has been subject to Treasury sanctions.
Toronto Stock Exchange
North American stock markets closed lower on Friday as the release of a new US inflation report spooked investors.
What had been a relatively flat week for North American markets ended on a streak of ups and downs as investors took stock of the latest U.S. producer price data.
The data showed wholesaler-level prices climbed 7.4% in November from a year ago — a slowdown from wholesale inflation of 8.1% in October, but a figure despite slightly higher than expected by economists.
“Inflation is the word of the day,” said Allan Small, senior investment advisor at IA Private Wealth Management. “And the numbers were hotter than expected. Down year over year, but warmer than expected.”
The Toronto Stock Exchange’s S&P/TSX Composite Index retreated 22.12 points to end the session at 19,947.07 points.
Investors are nervous ahead of the US Federal Reserve’s interest rate decision, expected next week, Small said. Friday’s report on the producer price index reinforced fears that the central bank will have to keep raising interest rates to keep inflation under control.
Stocks have recouped some of their losses recently, as inflation has slowed since peaking this summer. But it remains too high, which increases the risk that the Federal Reserve will have to continue to raise rates sharply to fully control it.
The Fed has already raised its key rate to a range of 3.75% to 4.00%, from virtually zero as recently as March.
Observers generally expect a rise of half a percentage point next Wednesday.
Earlier this week, the Bank of Canada raised its own key interest rate by 0.5 percentage points to 4.25%, its highest level since January 2008.
In the currency market, the Canadian dollar traded at an average rate of 73.37 cents US, down from 73.63 cents US on Thursday.
The recent stagnation in oil prices has been largely attributable to the COVID-19 lockdowns in China and concerns about an economic slowdown there. Now that China is starting to loosen its restrictions, Small believes the price of crude will soon see a recovery, as global energy supplies remain tight.
The Canadian Press