Stock market: Wall Street lacks encouragement and concludes slightly in the red

November 18, 2022

MARKET REVIEW. The New York Stock Exchange ended Thursday slightly in the red, lacking motivation after statements by Fed officials who stretched bond rates.

The Toronto Stock Exchange closed lower for a second straight session, dragged down by losses in the energy, information technology, utilities and metals sectors.

To (re)consult market news

Stock market indices at closing

In Toronto, the S&P/TSX fell 73.38 points (-0.37%) to 19,884.58 points.

In New York, the S&P 500 fell 12.23 points (-0.31%) to 3,946.56 points.

The Nasdaq ended down 38.70 points (-0.35%) at 11,144.96 points.

The DOW fell 7.51 points (-0.02%) to 33,546.32 points.

The loonie rose US$0.0001 (+0.0150%) to US$0.7504.

Oil fell US$3.54 (-4.14%) to US$82.05 .

Gold closed down US$12.60 (-0.71%) at US$1,763.20 .

Bitcoin ended up US $139.38 (+0.84%) at US$16,690.43.

The context

“The market was nervous this morning when St. Louis, Missouri Fed President James Bullard mentioned a new terminal rate for federal funds,” said Art Hogan of B. Riley Wealth Management.

In a speech, James Bullard doubted that the Federal Reserve’s interest rate hikes had reached “sufficiently restrictive” zone and suggested that the terminal rate could reach up to 7%.

Fed funds rates are currently between 3.75% and 4% after multiple hikes.

In the bond market, yields on 10-year Treasury bills climbed to 3.77% from 3.69% the previous day, which depressed stocks in the early part of the session.

“But this market concern was then tempered and investors focused more on companies that had better results” than expected, such as Macy’s or Cisco stores, added the analyst.

“But overall, it seems that we are encountering technical resistance, especially for the S&P 500 which has closed below 4,000 points for several days; and that we lack a catalyst to climb higher, ”said Art Hogan again.

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.

On the stock market, Macy’s department stores fared well (M, +15.02% to US$22.67) while, even if their sales and profits fell in the 3rd quarter, forecasts for the year were raised thanks to promotions which allowed ample destocking but also thanks to the maintenance of wealthy customers on high-end brands.

Telecom specialist Cisco Systems (CSCO) beat quarterly revenue forecasts and reported improved supply chain. The stock gained 4.96% to US$46.59.

Cruise lines, which fall under the unpopular consumer discretionary sector on Thursday, led the decline with Norwegian Cruise (NCLH, -6.77% to US$16.40) , Royal Caribbean (RCL, -3.87% to US$57.81) as well as the travel site Booking (BKNG, -3.63% to US$1,940.76) .

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