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MARKET REVIEW. The New York Stock Exchange fell at the opening on Thursday, concerned about mixed results in distribution and new comments from members of the Fed that pushed bond rates up.
Stock market indices at the opening
In Toronto, the S&P/TSX fell 134.67 points (-0.67%) to 19,823.29 points.
In New York, the S&P500 lost 41.26 points (-1.04%) to 3,917.53 points.
the Nasdaq lost 129.45 points (-1.16%) to 11,054.21 points.
the DOW fell by 246.37 points (-0.73%) to 33,307.46 points.
the loon was down US$0.0024 (-0.3186%) to US$0.7479.
the oil was down US$1.74 (-2.03%) at US$83.85.
gold was down US$14.40 (-0.81%) at US$1,761.40.
the bitcoin fell by US$10.93 (-0.07%) to US$16,518.25.
The Federal Reserve is “not doing the stock market any favors this morning,” complained Patrick O’Hare of Briefing.com.
The president of the Fed of Saint Louis (Missouri) threw the stone into the pond on Thursday in a speech doubting that the hikes in interest rates so far have led them into “a sufficiently restrictive zone”.
This assumes continued monetary tightening as investors hoped the Fed would ease off.
Another official, Mary Daly of the San Francisco Fed, meanwhile warned that an overnight rate hike of another full percentage point will likely be needed, as they currently hover between 3.75% and 4%. She also clearly ruled out a pause in rate hikes for now.
“These remarks echo the growing fear of market participants that more monetary tightening and economic slowdown will occur, which would not be good for the outlook for corporate earnings,” summarized Patrick O’Hare.
On the bond market, yields on 10-year Treasury bills rose to 3.78% from 3.69% the previous day, which depressed stocks.
Several indicators on Thursday also showed a slowdown in activity.
Construction of new homes in October fell by 4.2% and building permit applications were also down by 2.4%, which excludes an immediate improvement in the market as the rise in mortgages, in the wake of that of the Fed rates, spooks buyers.
In addition, manufacturing activity in the highly industrialized region of Philadelphia was in the red in November, for the third consecutive month, even falling to its lowest level since May 2020, according to data from the regional branch of the Fed.
The general index plunged to -19.4 points, against -8.7 points in October, it is thus well below zero, as in September and October, which means that activity is contracting.
At the rating, all sectors of the S&P were in the red, in the first place communications services, materials and consumer discretionary items which dropped almost 2%.
Amazon (AMZN), Meta (META) lost more than 2%, Tesla (TSLA) and Google (GOOGL) also dropped almost 2% while Netflix (NFLAX) melted by 4.71% and Disney (DIS) by almost 3%. In China, Alibaba (BABA) announced nearly 3 billion euros in quarterly losses due to the economic slowdown linked to Covid.
Cruise lines, which fall within the consumer discretionary sector, led the decline with Norwegian Cruise (NCLH) (-7.85%), Royal Caribbean (RCL) (-3.49%) while travel sites also drank the cup as Expedia (EXPE) (-3.16%) or Booking (BKNG) (-5.11%).
Big stores Macy’s (M) were doing well (+11.87%) while, even if their sales and profits fell in the 3rd quarter, the forecasts for the year were raised thanks to promotions which allowed destocking, but also thanks to the maintenance of wealthy customers on high-end brands.