(New York) The New York Stock Exchange ended the session, month and half strong on Friday, cheering on slowing U.S. inflation as Apple closed above for the first time. of the bar of 3000 billion dollars of capitalization.
The Dow Jones index gained 0.84% to 34,407.60 points and the technology-heavy NASDAQ climbed 1.45% to 13,787.92 points, posting its best first half since 1983. The index The broader S&P 500 advanced 1.23% to 4450.38 points, posting its best first six months of the year since 2019.
Over the month, the indices gained almost 6% for the NASDAQ and the S&P 500 and more than 4% for the Dow Jones.
“The past two years have been difficult and it feels good to end this semester on a positive note. I suspect this is not the end of it,” said Tom Cahill of Ventura Wealth Management.
Inflation in May in the United States, measured by the PCE index, the favorite barometer of the American central bank (Fed), slowed to 3.8% year on year against 4.3% the month before, according to new data from the Commerce Department released Friday. Over one month, it fell to +0.1%.
Another positive indicator in the eyes of the Fed, household spending slowed its growth to +0.1% over the month against +0.6% in April. By raising rates, the central bank seeks to slow down demand, and therefore consumer prices.
“Inflation came out in line with forecasts but the trend continues to be positively downward,” commented Tom Cahill. “Of course it is not slowing down as quickly as the central bank (Fed) would like, but there will be a lot of other data before the next monetary meeting,” the analyst told AFP.
In addition to the good news on the inflation front, consumer confidence in June improved markedly, reaching its highest level in four months. The index measuring this confidence rose 8.8% from May more than expected, according to the barometer of the University of Michigan.
These data provide grist for the mill “of the doves of the Fed”, that is to say to those who are less favorable to the continuation of the increase in the key rates, affirmed Andrew Hunter of Capital Economics. According to him, during the monetary meeting at the end of July, the Fed will raise the cost of credit again but that it will be “the last time”.
Taking advantage of the enthusiasm of the NASDAQ, Apple – already the largest group on the stock market – for the first time closed above the bar of 3000 billion capitalization. The title had to exceed 190 dollars to reach this valuation. It ended on a jump of 2.31% to 193.97 dollars or a capitalization of 3051 billion dollars.
A strong rating from Citigroup bank helped boost the stock, said Patrick O’Hare of Briefing.com. Since the beginning of the year, the title of Apple has climbed more than 50%. “It’s hard to say you’re in a bear market when a symbolic stock like Apple is hitting new highs,” Cahill said.
Elsewhere on the coast, all the big names in technology had the wind in their sails. On the processor side, Nvidia climbed 3.63% and AMD 2.40%. Meta and Amazon gained almost 2%.
After disappointing results announced the day before after the close, Nike slipped 2.65% to $110.37. The American sports equipment manufacturer recorded a sharp drop in its quarterly net profit, under the effect of markdowns to reduce its inventories and cost increases, despite rising turnover.
While the travel season is looking good, the cruise line Carnival took off (+9.73%), followed by Norwegian Cruise (+4.16%).
On the bond market, yields on Treasury bills, which had risen the day before, remained stable at 3.83% for ten-year ones.
The Toronto Stock Exchange
The flagship index of the Toronto Stock Exchange ended the first half of the year on a solid performance, registering a gain of more than 200 points, while the major American indices also advanced.
The Toronto floor’s S&P/TSX Composite Index gained 242.12 points on Friday to end the session with 20,155.29 points. The week saw gains across most sectors, particularly industrials, information technology and consumer discretionary.
The second quarter was “fantastic” for the US markets, observed Mike Archibald, vice-president and portfolio manager at AGF Investments. The S&P 500 index rose nearly 8% in the quarter, while the benchmark NASDAQ index is up nearly 13%.
Although the TSX hasn’t done as well comparatively due to its heavy concentration in energy stocks — a sector that has been hurt by falling crude oil prices in recent months — markets on both sides of the border have exceeded expectations for the first six months of 2023.
“The first half of this year was a big surprise for many people. There’s always a lot of money being put to work here, and that’s obviously what we’re seeing here today,” Archibald explained.
Investors are feeling optimistic mid-year, Archibald noted, because an economic recession has yet to materialize.
For much of the past year, central bank interest rate hikes raised fears of a hard landing in the economy. But with inflation easing – annual consumer price inflation in Canada was 3.4% in May, its slowest level in nearly two years – many investors believe the end of the bullish cycle rates is close.
That could mean it’s possible for the global economy to dodge the recession many predicted, Archibald said. “I was definitely on the risk side,” he admitted. I personally think the market will continue to rise. »
Even crude oil, which has lost around US$10 a barrel since April on fears of a shrinking global economy, rallied on Friday to close above US$70.
According to Mr. Archibald, the rise in oil prices of the past few days probably has more to do with the weakness of the American dollar than anything else, but he added that the longer the feared recession does not materialize, the more likely it is that crude prices rebound.
“If we get more definitive data that the economy is not in recession and we’re going to see a soft landing, then I think we’ll see some very dynamic catch-up trading in energy stocks. I just don’t know when it’s going to happen,” he explained.
Heading into the second half of 2023, second-quarter corporate financial results will be the “trump card” when it comes to stocks, Archibald said.
Once earnings reports start rolling out in the coming weeks, investors will have a better idea of the fairness of their economic outlook.
“I don’t want to sound overtly bullish, but I think the path for equities is pretty good,” he argued.
“If profits go up, then I think there will still be good times ahead of us. »
In the currency market, the Canadian dollar traded at an average rate of 75.53 cents US, up from 75.44 cents US on Thursday.
On the New York Commodities Exchange, crude oil prices rose 78 cents US to US$70.64 a barrel, while natural gas rose nearly 10 cents US to US$2.80 a barrel. million BTUs.
The price of gold climbed US$11.50 to US$1929.40 an ounce and that of copper rose 6 cents US to US$3.76 a pound.
The Canadian Press