(New York) The New York Stock Exchange ended mixed on Friday, digesting both a disappointing outlook in the semiconductor sector and positive inflation news ahead of a crucial week with the Fed meeting.
The Dow Jones index gained 0.16% to 38,109.43 points, the technologically dominated NASDAQ lost 0.36% to 15,455.36 points and the S&P 500 -0.07% to 4890.97 points.
Despite this modest slowdown, Wall Street concluded with a weekly gain thanks to the records set in recent sessions.
The broader S&P 500 index, the most representative of the market, gained almost 0.80% over the week.
“We had a mixed market today with Intel’s announcements which obviously weighed on the NASDAQ,” noted Peter Cardillo of Spartan Capital.
The microprocessor giant dropped 11.91% to $43.65 after reporting lower-than-expected forecasts for the current quarter. Intel said it now expected sales of $12.2 billion to $13.2 billion, well below the $14.2 billion expected by analysts.
This warning also caused sector stocks such as AMD (-1.71%), Nvidia (-0.95%), Broadcom (-2.04%) and Qualcomm (-2.43%) to fall.
Shortly before the opening of the session, the Commerce Department published inflation figures in the United States, measured by the PCE index, the favorite tool of the Federal Reserve (Fed) to gauge the evolution of price.
Price increases remained at 2.6% in December year-on-year. Over one month, however, it started to rise again, with prices increasing by 0.2% compared to November, as expected. But excluding food and energy, so-called “core” inflation fell to 2.9%, its lowest level in almost three years.
“We have had good news on the inflation side which is moving in the right direction,” noted Mr. Cardillo interviewed by AFP. “But we also had signs of strong consumption which scared the bond market and yields rose,” he added.
Household spending (+0.7%) actually increased faster than their income (+0.3%) in December.
Reacting to this consumer trend which risks delaying the Fed rate cuts expected this year by investors, ten-year bond yields climbed to 4.15% instead of 4.11% the day before.
While the Monetary Committee of the American central bank will make a decision on Wednesday, “the tone of the Fed’s message will remain semi-strict,” estimates Peter Cardillo.
“His message will be to say that if inflation is going in the right direction, it is still too early to claim victory, which pushes back any hope of rate cuts to the second half of the year,” said the analyst. .
Next week will also be heavy on corporate news with the results of Apple (-0.90%) and Microsoft (-0.23%), the two largest capitalizations on the market. Microsoft, which on Thursday had briefly exceeded $3,000 billion in capitalization, announced the layoff of 1,900 employees from its Xbox console subsidiary and Activision Blizzard.
The quarterly accounts of Alphabet (+0.10%), Amazon (+0.87%) and Meta (+0.24%) are also expected.
On the macroeconomic front, the jobs report for January will be released on Friday.
Among other stocks, Salesforce, the customer relations software group which is part of the Dow Jones, gained 0.32% while the company is preparing to cut 700 jobs, according to the Wall Street Journal, or 1% of its global workforce.
Benefiting from consumer enthusiasm, the credit card company American Express soared 7%, also driven by a 27% jump in its quarterly earnings per share and the forecast of an increase in its turnover. business from 9% to 11% in 2024, in the high range of analyst projections.
Its competitor Visa fell 1.72% after reporting a slowdown in the growth of payment transactions in January.
The manufacturer of toothpaste and hygiene and household products Colgate-Palmolive kept smiling (+1.97%) after financial performance above market expectations in the fourth quarter, anticipating the maintenance of this “growth dynamic” in 2024 and beyond.
The TSX index on the rise
The main Canadian stock index made a slight gain on Friday, while American stock markets ended the day mixed, dragged down by the technology sector.
The S&P/TSX Composite Index rose 23.74 points to 21,125.28.
Stocks caught their breath to cap off a strong week, said Angelo Kourkafas, senior investment strategist at Edward Jones.
“Even though the technology sector did the heavy lifting, pushing the major indexes to new highs, for the day the NASDAQ is down,” he noted Friday.
Intel weighed on the broader market after its revenue and profit forecasts met with disappointment, despite strong results. Its stock closed down almost 12%.
At the same time, two reports in the United States on Friday painted a portrait of a still resilient economy.
The U.S. Federal Reserve’s preferred measure of inflation continued to slow last month, according to the government’s latest report. Base prices increased by 2.9% compared to the same period of the previous year.
The data gives the Fed a little more room to start cutting its key interest rate, Mr. Kourkafas said, although it remains difficult to predict when that might happen. Expectations are rather divided on the possibility of first reductions as early as March.
Another report, meanwhile, showed that consumer spending strengthened to a greater level than expected in December.
“This is part of a broader story as we finish the week and reflect on the strong gains,” Mr. Kourkafas said.
The resilience of the US economy increases the chances of a soft landing, he argued.
Next week will take place the first Fed meeting of the year, where it should echo Canada’s posture this week: unchanged rates, but a message more oriented towards future reductions, underlined Mr. Kourkafas.
Some of the biggest tech names that have dominated the market will also release their results for the latest quarter, including Microsoft, Alphabet, Amazon and Meta.
“All of this, of course, matters a lot to the markets and to the S&P in particular,” Mr. Kourkafas said.
“But it will also be interesting to see what kind of insights they offer,” he added, particularly on artificial intelligence, which has been a key factor in the technology sector’s recent outperformance.
Canada will also receive new GDP data.
The Canadian economy has not been as resilient as that of the United States and is on the verge of a technical recession as interest rates weigh heavily.
The Canadian dollar stood at 74.35 US cents, up from 74.10 US cents on Thursday.
On the New York Mercantile Exchange, crude oil was up 65 cents at US$78.01 per barrel and natural gas slipped half a cent to US$2.18 per million Btu.
Gold fell 50 cents to US$2017.30 an ounce and copper lost two cents to US$3.85 a pound.
Rosa Saba, The Canadian Press