(New York) The New York Stock Exchange closed down on Friday to end a very dynamic half-year for the indices, while American inflation slowed slightly, as expected.
Published at 9:41 a.m.
Updated at 4:35 p.m.
The Dow Jones index lost 0.12% to 39,188.86 points. The NASDAQ, with its strong technological coloring, and the S&P 500, which during the session came close to new records, fell respectively by 0.71% to 17,732.60 points and by 0.41% to 5,460.48 points.
While Wall Street had started in the green, welcoming inflation in the United States which had slowed, the indices changed direction in the wake of a sudden rise in bond yields.
Ten-year rates rose to 4.35% from 4.28%. Karl Haeling of LBBW said the sudden tension in the bond market could be explained by the approach of an intervention by the Bank of Japan (BoJ) to support the yen.
“There has been talk in the market all week that the BoJ intends to wait for the release of the US PCE inflation index to intervene when trade is weak which would cost less money to support the yen,” Haeling said.
“The last time they intervened was on a Friday afternoon New York time,” the analyst recalled.
If this hypothesis is true, bond yields rise because Japan may sell US Treasury bonds to finance its intervention.
A delayed reaction to the presidential debate the day before between Joe Biden and Donald Trump cannot be ruled out to explain the decline in stocks at the end of the session.
While the debate seems to have turned to the advantage of the Republican candidate, some investors fear that the policy of an elected Donald Trump “will be inflationary, with increases in import taxes”, underlined Karl Haeling.
Even with a slight decline on Friday, stocks nevertheless closed with a fabulous quarter, or even half-year.
Over the first six months of the year, the NASDAQ, boosted by the craze around interactive artificial intelligence and the semiconductor sector, soared by almost 20%.
The broader S&P 500 index climbed more than 15% while the Dow Jones advanced 4%.
On Friday, the US Department of Commerce released the PCE inflation index, the Fed’s preferred measure for judging price developments, which stalled as expected in May.
It stood at 2.6% over a year, after 2.7% in April.
Over the month, prices remained the same, with the inflation rate at zero, compared to +0.3% the previous month.
The annual change in PCE “has decelerated to its slowest pace since 2021 and is within reach of the Fed’s 2% target,” said Rubeela Farooqi, chief economist at High Frequency Economics.
For Peter Cardillo of Spartan Capital, “this shows that inflation has peaked and is moving in the right direction.”
On the value front, semiconductors, the NASDAQ’s favorite sector with Nvidia (-0.36%), remained positive.
AMD gained 1.72%, Qualcomm 2.07% and Taiwan Semiconductor Manufacturing, which is approaching the $1 trillion mark in stock market valuation, gained 1.28%.
Nike shares fell 19.99% in their worst session ever after mixed fourth-quarter results. Quarterly sales of $12.6 billion were disappointing, with a poor performance in China.
The distributor Foot Locker lost 2.35%.
Shares of DJT, owned by Donald Trump’s social network, Trump Media and Technology Group, fell 10.84% after a bitter televised debate between President Joe Biden and candidate Donald Trump.
Semiconductor company Infinera soared 15.78% to $6.09 after Finland’s Nokia announced it was buying the company in a deal valued at $2.3 billion.
Toronto Stock Exchange
Canada’s main stock index closed lower on Friday in a broad-based decline, while U.S. markets also ended the day in the red, despite gains earlier in the session.
The S&P/TSX Composite Index lost 66.37 points to 21,875.79.
The Canadian dollar traded at 73.06 US cents, compared to 73.05 US cents on Thursday.
The Canadian Press
