(New York) The New York Stock Exchange ended higher on Thursday, buoyed by the prospect of a resolution of the American debt file and an inflation indicator which reassured on the trajectory of prices in the United States.
The Dow Jones ended up 0.47%, the NASDAQ index gained 1.28% and the broader S
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After having started in disorganized order and within tight margins, the indices left resolutely in the green in the second part of the session.
For Steve Sosnick of Interactive Brokers, the impetus was given by the report from the trade federation ISM. More than the further contraction in manufacturing activity in May in the United States, investors took note of the sharp drop in prices paid, to their lowest level in five months.
“It’s just a number, but the market wants good news from the inflation front,” commented the analyst.
This indicator is part of a context of newfound serenity after the vote, Wednesday evening in the House of Representatives, of the text suspending the debt ceiling, which must, subject to adoption in the Senate, dispel the specter of a default of payment from the United States.
This impending resolution caused bond yields to slide again. The return of confidence in US Treasuries drives up their prices, which move in opposite directions to their yields.
The 10-year US government bond rate was 3.60%, compared to 3.64% the day before closing.
The ADP report could have tarnished the picture, as it reported 278,000 job creations in April, well above the 180,000 expected, signaling that the labor market remains tight and potentially overheating prices.
But ADP said the increase in the average wage had decelerated compared to March.
This new snapshot of the job market, which bears witness to a still vigorous economy, has also been put into perspective by a new public statement by a member of the American central bank (Fed), the president of the Philadelphia branch Patrick Harker, in favor of a monetary status quo at the June 13-14 meeting.
After having counted on June, then on July, the operators are now betting on an increase in September after two months without change.
On the stock market, the computer manufacturer Dell (1.45%) surprised by publishing, in the middle of the session, its quarterly results, which exceeded expectations and showed an improvement in its margins, which pleased Wall Street.
The big names in AI resumed their irresistible rise, after some profit-taking on Wednesday, such as Nvidia (5.82%), Amazon (1.82%), Microsoft (1.28%) or Meta (2.98%), whose CEO, Mark Zuckerberg, presented a new model of virtual reality headset, dubbed Quest 3.
The Toronto Stock Exchange closed Thursday with a gain of more than 100 points, boosted by strength in the energy and base metals sectors, while major U.S. indexes also advanced.
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With time running out, the US Senate is rushing to complete its review of the debt ceiling bill, after it passed the House of Representatives on Wednesday night.
Although uncertainty amid ongoing talks has weighed on markets, investors are now focusing on other things, observed Tamsin Wilding, bond analyst at Leith Wheeler.
“I think it starts to fade as we move on,” Ms. Wilding said.
What’s front and center now is the discussion of a possible suspension of interest rate hikes by the Federal Reserve at its next meeting, she pointed out.
Recent economic data releases have investors increasingly eyeing a potential upside, despite earlier expectations of a pause.
But Fed officials signaled there was no rate hike in the cards for the June meeting, with one governor even saying skipping a rate hike at the next meeting would help decision-makers to consult more economic data before making decisions.
With these comments, the market is starting to cool its expectations a bit, Wilding said.
“The discussion is really about how they might take a break,” she said. Do they stop right there, or do they decide to skip a meeting? Maybe they’re doing a raise every two meetings from now on? »
The market is now pricing the probability of a rate hike at 25% for the June meeting, down from previous expectations. That probability increases to 60% in July, she continued.
The tech sector again outperformed the broader market on Thursday, which Wilding attributed to a boost early in the month as well as talk of an interest rate break for June.
Meanwhile, in Canada, markets are still expecting a break in June, but forecast another rally by September, she said.
In the currency market, the Canadian dollar traded at an average rate of 74.17 cents US, up from 73.51 cents US on Wednesday.
On the New York Commodity Exchange, crude oil prices rose US$2.01 to US$70.10 a barrel, while natural gas fell US$11 cents to US$2.16 a million. of BTUs.
The price of gold rose US$13.40 to US$1995.50 an ounce and that of copper climbed US7 cents to US$3.71 a pound.
