The facade of the New York Stock Exchange (GETTY IMAGES NORTH AMERICA/AFP/SPENCER PLATT)
The New York Stock Exchange unexpectedly found new momentum on Tuesday, in a very thin market, after a sign of easing in the American labor market which pleads for a soft landing for the economy.
The Dow Jones index gained 0.85% to 34,852.67 points, the technology-dominated Nasdaq advanced 1.74% to 13,943.76 points and the S&P 500 index 1.45% to 4,497, 63 dots. Bond yields fell sharply to 4.11% for ten-year bonds, which also favored equities.
The release of the US Department of Labor’s JOLTS report showing job vacancies falling to 8.8 million in July, the lowest since March 2021 from 9.2 million the month before.
This apparent bad news for workers can be interpreted as a welcome sign of easing in the labor market, as this could prompt the US Federal Reserve (Fed) to refrain from raising interest rates further.
The strong market reaction was also amplified by the lack of action in the New York market as we approach the long Labor Day weekend.
“Today’s numbers were certainly a surprise. Investors were more focused on other economic numbers expected in the week, including the PCE inflation index and the official jobs report,” he said. ‘AFP Steve Sosnick of Interactive Brokers.
This decline in job offers “has been interpreted by the market as real good news even if it does not seem like it for the economy”, added the expert. “Because if you’re the Fed and you’re trying to get some balance back between supply and demand for jobs, that’s an appropriate number,” he continued.
Yields on Treasury bills, which fall when bond prices rise, responded immediately, losing ten basis points “in a minute and a half,” Sosnick said.
And bets on a rate hike by the Fed in November have dwindled, according to calculations by CME Group on futures products.
Added to this decline in available jobs was a sharply degraded US consumer confidence indicator in August.
“Retailers had already told us about this lack of consumer confidence in their conferences when they published their results,” recalled the Interactive Brokers analyst. The index measuring this confidence fell to 106.1 points, according to the Conference Board while investors expected 116: “A big failure!”, Steve Sosnick commented again.
The amplitude of the variations whether on the bond market, that of the foreign exchange – where the dollar has weakened – or that of the actions also had a lot to do with depopulation given the approach of the Labor Day holiday. , also pointed out the analysts.
On the stock side, technology drove the market.
3M shares, which had climbed more than 5% the day before, took another 1.39% after the American conglomerate confirmed a $ 6 billion agreement to end a lawsuit.
The agreement concludes years of litigation, pitting 3M and its subsidiary Aearo Technologies against thousands of US soldiers who believe their hearing was damaged between 1999 and 2015 by faulty earplugs.
Electronics and appliance store chain Best Buy jumped 3.82% after announcing better-than-expected quarterly results.
However, the brand has lowered its sales forecast for the whole year. Its leader Corie Barry reported weaker demand for technology products.
On the side of pharmaceutical groups, President Joe Biden announced the names of a dozen drugs for which the government wants to negotiate the price when they are insured by the Medicare system which takes care of the elderly. The pharmaceutical industry disputes this initiative which would save the State money.
The groups Bristol Myers Squibb, Pfizer, Eli Lilly, Johnson and Johnson, Merck, Novo Nordisk, Amgen, AstraZeneca are particularly concerned. Most of those listed on Wall Street have slowed their rise like Johnson and Johnson (+0.02%) or Eli Lilly (+0.01%).
© 2023 AFP
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