The New York Stock Exchange rose slightly on Friday, analyzing contrasting indicators that fuel the idea of continued monetary tightening but are poised for a year-end rebound.
In Toronto, the leading index rose nearly 100 points in a market where most sectors except energy are in the negative.
Investors welcomed the release of the PCE Price Index, most closely watched by the U.S. central bank (Fed), which showed a 5.5% year-over-year increase in November, up from 6.1% the previous month.
But the market expected core inflation (excluding food and energy) to be lower, at 4.7% compared to 4.6%. But inflation remains very high, well above the level the Fed can accept.
In fact, the hypothesis of a key interest rate hike above 5% next year, which was widely rejected a week ago, is gaining traction again, which is unfavorable for equity markets.
In the bond market, the yield on 10-year U.S. government bonds rose to 3.73% from 3.67% the day before.
The PCE survey also showed that consumption in November rose 0.1% for the month, less than economists expected (+0.2%). The pause, according to Oxford Economics, is due to a sharp rise in interest rates and still high inflation.
"A slowdown in consumption is bad for stock markets because it implies a deterioration in corporate results," argues Chris Zaccarelli of the Alliance of Independent Consultants.
Nevertheless, the indexes rebounded with another indicator, the University of Michigan's Consumer Confidence Index, which reached 59.7 points in December, better than economists had expected (59.1).
Some on Wall Street still believe in the possibility of a final rebound later in the year, despite the prevailing gloom, for the more the market widens downward, the more likely a rebound becomes. Since Monday is a holiday in the U.S., that leaves only four trading days for the indices to rise a bit.
In the stock market, Tesla has been unable to stop its decline (TSLA, -0.37% to $124.88), which began weeks ago, despite statements from Elon Musk, the boss and reference shareholder of the electric car maker, who pledged Thursday in a Twitter forum not to sell Tesla stock in 2023.
A growing number of analysts are warning that trouble is just beginning for Tesla as it faces slowing demand, and Elon Musk is busy tweeting at a time when investors need a leader who can maneuver through the economic downturn.
In a gloomy environment of growth concerns, tech stocks continued to suffer, whether Apple (AAPL, -0.64%) or Microsoft (MSFT, -0.36%).
On the other hand, the Dow Jones was supported by so-called defensive stocks, meaning those considered less sensitive to economic conditions that performed well, such as Coca-Cola (KO, +0.43%), Merck Laboratories (MRK, +0.58%) and industrial conglomerate Honeywell (HON, +0.41%).
Airlines continued to suffer the effects of the storm that hit the United States and is expected to last through the Christmas weekend. Several hundred flights were still cancelled Friday because of weather conditions.
Delta Air Lines (DAL, -0.71%) and American Airlines (AAL, -0.81%) were also affected.
Leave a Reply
Your email address will not be published. Required fields are marked *