Stock market: Wall Street ends, bets on short recession

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MARKET OVERVIEW. The New York Stock Exchange closed on Thursday after a choppy session over a new hearing in Congress by the Fed chairman, who again showed his determination to fight inflation.

The Toronto Stock Exchange fell nearly 300 points on Thursday, with the energy and mining sectors taking the biggest losses as investors remain concerned about the possibility of an impending recession.

Consult market news (again).

Stock market indices at close of trading

In Toronto, the S&P/TSX fell 286.92 points (-1.51%) to 18,717.12 points.

In New York, the S&P500 rose by 35.84 points (+0.95%) to 3,795.73 points.

the Nasdaq rose by 179.11 points (+1.62%) to 11,232.19 points.

the DOW ended up with 194.23 points (+0.64%) at 30,677.36 points.

the loons fell from $0.0028 (-0.3594%) to $0.7696.

the oil fell $2.05 (-1.93%) to $104.14.

gold closed at $12.20 (-0.66%) at $1,826.20.

the Bitcoin ended at $1,025.79 (+5.16%) at $20,895.55.

the context

“Recession is always at the heart of debates on Wall Street,” noted Oanda’s Edward Moya.

But for Karl Haeling, a pundit at LBBW, a change in investors’ expectations of rate hikes seemed to show that fears of a recession could be short-lived.

“It was a very interesting day. A week ago, the market priced in Federal Reserve (Fed) rates in excess of 4% and saw them peak in Q3 2023. Now they are seeing a rise to 3.5% with a peak in Q1 2023,” the analyst noted.

Investors therefore saw a faster rate hike over time that corresponded to a shorter economic slowdown.

Yields on 10-year Treasury bills, which move inversely to those bonds, fell sharply to 3.08% from 3.15% the previous day.

Two-years also narrowed significantly towards 10-years at 3.00%, a “flattening of the curve” that is commonly interpreted as a sign of a short-term recession.

“At the same time, we are experiencing a global realignment of prices, for example for commodities that are low in fifteen months or for energy in a month,” underlined Karl Haeling.

“We have to make big decisions on the stock market,” he said, explaining the changed mood of the course.

“Do we need to sell because we’re entering a recession, or buy because the magnitude of rate hikes will be smaller and faster than we thought?”

Speaking before a House committee on his second day of the annual US Congress hearing, Fed Chair Jerome Powell “maintained his hawkish stance on the fight against inflation,” Edward Moya pointed out. The central bank governor reiterated that the fight against inflation at its highest level in 40 years remains “unconditional”.

For LPL Financial’s Quincy Krosby, the market was torn between risk appetite and risk aversion “until, like the Fed, he saw hard evidence that inflation had plateaued.”

Seven of the 11 S&P sectors ended in the green, starting with healthcare (+2.22%) and real estate (+2.01%), but leading the way was energy (-3.74%) and materials (-1.40%). the decline.

The express carrier FedEx (FDX) Up 2.91% in electronic trading after the close to $234 as the group forecast higher earnings for fiscal 2023.

While the energy sector had a poor session amid the decline in crude oil prices, the oil major was Occidental Petroleum (OXY) Corporation stayed afloat (+0.57% to $56.09).

Warren Buffett’s Berkshire Hathaway fund further increased its stake by buying about 9.5 million more shares this week, according to documents filed with the SEC.

The American tobacco company Altria (MO), which owns 35% of shares in Juul Labs, whose FDA banned the sale of electronic cigarettes on Thursday, rebounded 2.43%. The stock was down more than 9% the previous day pending a decision from US health officials.

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