MARKET OVERVIEW. The New York Stock Exchange, which got off to a good start on Tuesday and tried to continue last week’s momentum, ended at half-staff, undermined by the loss of American consumer confidence.
Consult market news (again).
Stock market indices at close of trading
In Toronto, the S&P/TSX fell 35.58 points (-0.18%) to 19,222.74 points.
In New York, the S&P500 fell 78.56 points (-2.01%) to 3,821.55 points.
the Nasdaq closed 343.01 points (-2.98%) at 11,181.54 points.
the DOW fell 491.27 points (-1.56%) to 30,946.99 points.
the loons closed at $0.0002 (-0.0233%) at $0.7767.
the oil closed $2.47 (+2.25%) at $112.04.
L’gold lost $3.80 (-0.21%) to $1,821.00.
the Bitcoin declined $648.07 (-3.10%) to $20,268.49.
However, the session had started well with positive news from China about its zero-tolerance policy towards Covid-19.
Indeed, Beijing has announced that it has halved the quarantine period for travelers arriving in China, “the biggest change yet in its policies to combat the pandemic, which isolating the country and raising economic concerns,” became National’s Art Hogan Securities congratulated.
But that balm in the hearts of investors hoping for a rebound in demand evaporated after the release of the Conference Board’s US consumer confidence index.
This deteriorated much more than expected in June, falling to its lowest level since February 2021.
Falling to 98.7 points, the index fell 4.5 points from May when analysts had expected 101 points.
The assessment of the future economy, which is based on their earnings and job expectations, continued to deteriorate, falling 7.3 points to 66.4 points, the lowest level since March 2013.
“A drop in confidence is normal what happens with inflation and in principle it’s not necessarily bad for the market because it means the economy is slowing down, prices should rise and therefore the Fed should be less aggressive.” commented Gregori Volokhine from Meeschaert Financial Services.
“More worrisome, however, is that Americans’ inflation expectations remain at 8% yoy, showing they lack confidence in Fed policy,” Mr Volokhin said.
“With this lack of confidence in the Fed’s policy to curb inflation, “Americans, who are still the investors, are not going to invest in the market now anyway,” he said.
Oanda analyst Craig Erlam said the confidence index reading was “a blow” to the market.
“The sharp decline in the expectations component does not bode well for spending resilience,” while consumption is by far the driver of the US economy, he stressed.
It noted that “areas of weakness are emerging in the economy, like the housing market and maybe soon consumer spending.” “It would be a massive setback and possibly the strongest signal yet that the United States is headed for recession,” Erlam said.
However, New York Fed President John Williams reiterated Tuesday’s reassurance that the world’s largest economy should avoid a recession.
“Recession is not my base case right now,” Williams said on CNBC. “I think the economy is strong,” he added, forecasting US GDP growth of between 1% and 1.5% for the year, albeit less strong than what the central bank released a year ago ( +1.7%).
Almost all sectors of the S&P ended lower, starting with non-essential spending, which lost more than 4%, followed by so-called growth stocks in information technology (-3.01%) and communications (-2.92%).
Only energy stayed afloat in the wake of the rise in crude oil prices (+2.71%).
The big names in technology have weighed on the Nasdaq such as: Amazon (AMZN, $107.40, -5.14%, -5.82 points), Meta (Facebook) (META, $160.68, -5.20%, -8.81 points) Where You are here (TSLA, $697.99, -5%, -36.77 points), all falling more than 5%. Semiconductor manufacturers also crashed AMD ($80.78, -6.24%, -5.38 points) Where Nvidia ($159.82, -5.26%, -8.87 points).
in the consumer goods sector, Nike (NKE, $102.78, -7.72 points) tumbled nearly 7% after releasing lackluster full-year guidance, partly due to lower sales in China.
The device manufacturer jacuzzi (WHR, -2.85 points) shed 1.74% to $161.03 after announcing its exit from the Russian market by signing an agreement to sell its operations in the country to a Turkish manufacturer. Arcelik (ARCLK, 77.65 TRY, +2.64%, +2.00 points). That decoupling should result in a loss of $300 million to $400 million for Whirlpool in the second quarter.