(New York) Stock indexes edged higher on a shortened trading day on Monday as momentum slowed on Wall Street after the strong first half of the year.
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Tesla was the most powerful force that lifted the S
Rivian Automotive, another electric vehicle company, jumped 17.4% after also reporting spring deliveries that beat analysts’ expectations.
On the losing side on Wall Street was Apple, which slipped 0.8% after becoming the first US company on Friday to end a trading day with a total market value of more than US$3 trillion.
For the rest, the markets were relatively calm after a surge where the S
Trading on U.S. stock markets ended at 1 p.m. They will remain closed on Tuesday for Independence Day.
The Toronto Stock Exchange remained closed on Monday for Canada Day.
Market gains so far this year have come as the U.S. economy has defied many recession forecasts. The labor market, in particular, has remained strong despite much higher interest rates intended to reduce inflation.
One sector of the economy that has faltered is manufacturing, and a report on Monday showed it contracted in June for an eighth consecutive month. The reading from the Institute for Supply Management (ISM) was worse than economists expected.
“Manufacturing is stuck in the mud and it looks like more rain is coming,” said Brian Jacobsen, chief economist at Annex Wealth Management. The only consolation in the ISM report was that inflationary pressures are absent, but that is little comfort when earnings continue to be at risk. »
Still, investors are hoping that strength in other areas will keep the economy from slipping into recession, which would help support corporate earnings. A report later this week will go a long way to underscore or weaken this argument.
On Friday, the US government will release its latest monthly update on economy-wide hiring, as well as worker wage increases. This is one of the last big data pieces left before the Federal Reserve’s next interest rate policy meeting.
The Fed has already raised rates by 5 percentage points from virtually zero at the start of last year in hopes of bringing inflation under control. But there is reason to believe that it could be nearing the end of the increases, which would mean less additional pressure on the economy and financial markets. Many on Wall Street expect her to raise rates on July 26.
Investors’ hope is that this will be the last increase of the Fed cycle. The Fed, meanwhile, has hinted that it may raise rates twice more this year.
Besides Friday’s jobs report, the other big data that could change the Fed’s thinking ahead of its next meeting is likely the monthly inflation update.
In the bond market, yields fluctuated on weaker than expected data from the manufacturing sector. The 10-year Treasury yield recovered from an initial decline to hit 3.85%, from 3.84% on Friday night. The two-year yield, which moves more in line with Fed expectations, also pared losses to 4.92% from 4.90% Friday night.
European markets ended slightly lower. Japan’s Nikkei 225 rose 1.7% to add to its strong run to start the year. Stocks rose across much of the rest of Asia, with Hong Kong up 2.1% and South Korea up 1.5%.