(New York) The New York Stock Exchange unexpectedly found new momentum on Tuesday in a very thin market, after a sign of easing in the US labor market that argues for a soft landing for the economy.
The Dow Jones Index gained 0.85% to 34,852.67 points, the tech-heavy NASDAQ advanced 1.74% to 13,943.76 points and the S Index
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 an easing in the labor market as it could prompt the US Federal Reserve (Fed) to forego 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 data expected in the week, including the PCE inflation index and the official jobs report,” explained Steve Sosnick of Interactive Brokers.
This decline in job vacancies “has been interpreted by the market as real good news even if it does not seem like good news 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 Treasuries, which fall when bond prices rise, reacted 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 released their results,” the Interactive Brokers analyst recalled. The index measuring that confidence fell to 106.1 points, according to the Conference Board as investors expected 116: “A big miss!” “, commented Steve Sosnick again.
The amplitude of the variations whether on the bond market, that of the foreign exchange – where the dollar weakened – or that of the stocks had also much to do with depopulation given the approach of the Labor Day holiday, underlined also analysts.
On the stock side, technology drove the market.
The 3m shares which had climbed more than 5% the previous day gained 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 chain Best Buy jumped 3.82% after reporting better-than-expected quarterly results.
However, the brand has lowered its sales forecast for the year as a whole. 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 contests 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 slowed their rise like Johnson and Johnson (0.02%) or Eli Lilly (0.01%).
Gains in the energy, technology and base metals sectors helped the Toronto Stock Exchange close Tuesday up 1.32%, while major U.S. indexes also showed gains.
The composite index S
In the currency market, the Canadian dollar traded at an average rate of 73.57 US cents, up from 73.55 US cents on Monday.
