(New York) The New York Stock Exchange managed to rebound Thursday for the penultimate session of a very bad year 2022 for equities.
The Dow Jones index gained 1.05% to 33,220.80 points, the tech-heavy NASDAQ jumped 2.59% to 10,478.09 points and the S&P 500 advanced 1.75% , at 3849.28 points.
“There was hardly any economic news, the rebound is certainly the correction in selling that has taken place in recent days,” commented Ipek Ozkardeskaya, analyst for Swissquote Bank, pointing out that the low trading volumes amplified the movements in a sense as in the other.
For Marris Ogg, too, “the end of the sales cycle may be in sight,” the portfolio manager told Tower Bridge Advisors.
Still, the year 2022 will have “clearly been difficult for investors”, commented Art Hogan of B. Riley Wealth Management.
To date on Wall Street, the index of star stocks is down almost 9% over the year, the S&P 500, the most representative of the American market, has fallen by 20%. As for the NASDAQ, where popular technology stocks are concentrated, it tumbled almost 35%.
“The bad news is that 2023 could be bumpy, at least for the first few months,” with the prospect of a mild recession in the US economy, added Art Hogan.
While the calendar of indicators has been very quiet this week, weekly jobless claims in the United States rose more than expected to 225,000 (+9,000) last week, the Labor Department said on Thursday.
The stock market indices reacted by consolidating their rise, seeing in this very slight deterioration in the job market a sign of the effectiveness of the Fed’s key rate hikes.
Market operators tend to think that this could invite the central bank to slow down its increases in the cost of credit, which aim to cool the job market, therefore the economy and inflation in general.
Yields on ten-year Treasury bills fell to 3.82% from 3.88% and the dollar fell 0.51% against the euro to 1.0666 dollars to the euro.
The eleven sectors of the S&P concluded amply in the green, technology in the lead, whether it is communication services (+2.69%) or information technology (+2.64%).
Even the real estate sector, although at half mast at the moment due to the rise in interest rates, gained momentum (+2.16%) as did the banks (+1.43%).
The Tesla action, which has suffered heavy losses in recent weeks (-44% in one month), has clearly recovered its head to 121.82 dollars (+8.08%).
Its competitors in electric vehicles followed suit such as Lucid (+5.02%) or Rivian (+5.58%). Major automakers also benefited from the trend, with General Motors gaining 3.50%.
Tech megacaps also picked up like Apple, Amazon and Alphabet (Google), all of which rose by more than 2.80%. Meta, parent company of Facebook and Instagram jumped 4.01% and Netflix, which benefited from a good rating from analysts, climbed 5.14%.
Three days after the cruel blizzard that battered large parts of the United States and caused transportation chaos, Southwest airline is still struggling with the cancellation of 2,300 new flights on Thursday and a pile of lost baggage.
The title, however, raised its head a little (+3.70%) to 33.38 dollars after having lost more than 10% since Christmas.
Other airlines also rebounded like American Airlines (+3.08%) and Delta (+2.31%).
Toronto Stock Exchange
Canada’s main composite stock index more than recouped Wednesday’s losses, as it gained more than 1% on Thursday, while U.S. markets also rebounded.
The S&P/TSX Composite Index in Toronto gained 201.79 points at the close, to 19,485.89. Nearly every major sector on the TSX posted gains of close to 1% or more on Thursday: the energy sector rose 1.32%, financials 1.27%, information technology 3.06% and health care 2.76%.
After a dismal Wednesday, which saw the NASDAQ hit new lows, Thursday marked a change in tone in this Boxing Day week, said Stephen Duench, vice-president and portfolio manager at AGF Investments. A few factors contributed to these gains, he said.
One of these factors concerns new employment data in the United States, which suggests a cooling of the labor market due to the increase in unemployment benefit claims. Nothing dramatic, according to Mr. Duench, but any sign that the Federal Reserve’s rate hikes are bearing fruit is good news for investors, he said.
China was also the source of a seesaw in the markets. They were optimistic about the country easing its health restrictions, but less positive about the increase in COVID-19 cases. Some countries impose screening tests on visitors from China.
“There has been a back and forth on the COVID front in China […]but at least today it was more positive,” Mr. Duench said.
Sales at a loss for tax reasons
December was an abnormally bad month in the markets, he added. It was a month for sales at a loss, Mr. Duench recalled, with the last day Wednesday in Canada for “sales at a loss for tax reasons”. Thus, investors may have already made many of their sells at a loss, which means that positioning may be more positive for the last day of the trading year.
Historically, more volatile or declining years see more pronounced selloffs towards the end of the year, Duench said.
The instability will continue into 2023, he said, and investors will be looking for a sense of what is happening in the economic data, which will help answer some of the unanswered questions about central bank decisions on the matter. interest rates in the coming months.
The Canadian dollar was trading at 73.76 cents US, compared to 73.72 cents US on Wednesday.
The February crude contract was down 56 cents US, at US$78.40 a barrel, and the February natural gas contract was down 13 cents US, at US$4.56 per million BTU.
The Canadian Press