(New York) The New York Stock Exchange closed higher on Wednesday, reacting favorably to an employment indicator and to the minutes of the last meeting of the American central bank (Fed), which encourage investors to bet on an imminent series of rate cuts.
The Dow Jones Industrial Average gained 0.14%, the NASDAQ Index gained 0.57% and the broader S&P 500 Index gained 0.42%.
The session had started under good auspices thanks to several publications from major distribution players.
The Target supermarket chain (+11.20%) created a surprise, with results above expectations and the raising of its annual profit targets.
Target’s results will bring a sigh of relief to the retail industry and are further evidence that while consumers remain restrained and cautious, they are not in recession mode.
Neil Saunders, GlobalData
The same story was heard at TJX (+6.11%), the holding company controlling the clothing chains TJ Maxx and Marshalls and the decoration chain HomeGoods, known for their low prices. The results came in above analysts’ expectations, and the company raised its targets.
The picture was not tarnished too much by the accounts of department store giant Macy’s (-12.91%), which missed the target on turnover and revised downwards its revenue forecasts for the whole of its financial year.
The New York indices then found a relay in a report from the US Department of Labor. According to it, the US economy created, between April 2023 and March 2024, 818,000 fewer jobs than initially announced.
“This revision reinforces the likelihood of a half-point rate cut” at the Fed’s policy committee meeting on September 17-18, commented Peter Boockvar of Bleakley Financial Group.
Operators now attribute a nearly 40% chance of this scenario occurring, which would be unusual because central banks generally change their rates by a quarter of a point each time.
For Quincy Krosby of LPL Financial, the minutes of the Fed’s latest meeting, released Wednesday, confirmed that the institution is now paying close attention to the deterioration in the labor market.
So, despite the reluctance of several of its members to declare that inflation is now under control, the Fed “seems quite comfortable with the idea that starting a cycle of monetary easing will be enough to prevent the economy from deteriorating too sharply,” the analyst estimated.
Inspired by these developments, bond yields eased slightly. The rate on 10-year US government bonds stood at 3.80%, compared to 3.82% the previous day at the close.
“The report [de la Fed] confirms that a decline is almost a given for September,” added Jack Ablin of Cresset Capital.
The analyst noted as a positive signal the good performance on Wednesday of the Russell 2000 index, composed only of SMEs. “The buying movement is widening” to neglected values ”thanks to the prospect of lower rates.”
On the stock market, the Chinese e-commerce group JD.com, listed in New York, plunged (-4.15%).
The Walmart distribution group (+0.94%) indicated, in a document filed Tuesday evening with the American markets regulator (SEC), that it had sold its entire stake in the capital of JD.com.
Ford gained 1.59% after announcing it would drop plans to produce a new three-row electric SUV, opting instead for a hybrid vehicle. The move will result in a one-time charge of $400 million and additional costs of $1.5 billion.
Investors are looking favorably on Ford’s change in strategy, which recognizes strong demand for hybrid vehicles and slowing sales of electric cars.
TSX closes higher
Canada’s main stock index advanced Wednesday, helped by strength in base metals and technology stocks.
The S&P/TSX composite index closed up 84.29 points at 23,121.73.
The Canadian dollar was trading at 73.57 US cents compared to 73.38 US cents on Tuesday.
On the New York Commodity Exchange, the crude oil contract fell by US$1.24 to US$71.93 per barrel and the natural gas contract fell by two cents to US$2.18 per million BTU.
Gold prices fell $3.10 to $2,547.50 an ounce and copper prices rose three cents to $4.19 a pound.
Associated Press