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MARKET REVIEW. The New York Stock Exchange ended sharply lower on Thursday amid growing concern over the path of the US economy in 2023, with companies on the defensive and fears of further monetary tightening.
Canada’s main stock index fell more than 200 points on Thursday, dragged down by widespread losses.
To (re)consult market news
Stock market indices at closing
In Toronto, the S&P/TSX dropped 221.44 points (-1.13%) to 19,349.66 points.
In New York, the S&P 500 closed down 56.05 points (-1.45%) at 3,822.39 points.
The Nasdaq fell 233.25 points (-2.18%) to 10,476.12 points.
The DOW fell 348.99 points (-1.05%) to 33,027.49 points.
The loon fell US$0.0023 (-0.3121%) to US$0.7327.
The oil retreated US$0.04 (-0.05%) to US$78.25.
L’or dropped US$25.20 (-1.38%) to US$1,800.20.
The bitcoin rose US$12.91 (+0.08%) to US$16,803.86.
The context
Wall Street did not welcome, before the opening, the upward revision of the estimate of American growth for the third quarter, to 3.2% at an annualized rate against 2.9% so far, while economists expected a status quo.
“The economy continues to grow and households to spend,” reacted Rubeela Farooqi, of High Frequency Economics. Although it expects a slowdown in 2023, “the priority on fighting inflation means that rates will stay higher, longer, next year”.
In addition, new weekly jobless claims came in below expectations, a sign that the job market remains strong.
These two better than expected indicators “reinforce, in the minds of investors, the possibility that the Federal Reserve will be more offensive” on the monetary level next year and continue to raise its rates, according to Tom Cahill, of Ventura Wealth Management.
However, rates changed very little on Thursday, confirming the recent trend of a stabilized bond market, after a turbulent year 2022.
The yield on 10-year US government bonds stood at 3.68%, compared to 3.66% the day before.
For Adam Sarhan, of 50 Park Investments, the last days of 2022 are an opportunity to liquidate positions and realize losses, which tends to favor the market downturn. A movement which is accentuated by the low volumes of exchanges due to the absence of many operators, already on leave.
Another negative element, “the publications of results have disappointed”, noted the analysts of Schwab, in a note.
Among them is the used car sales network CarMax (KMX, -3.66% to US$57.20), which faces a deceleration in the sector and missed the target set by analysts.
The semiconductor manufacturer Micron (MU, -3.44% to US$49.43) also announced Wednesday results below expectations, with sales down 38% and a net loss.
The group is suffering from a slowdown in demand for microchips, particularly for smartphones, and plans to cut its workforce by around 10% in 2023.
After a first salvo in the technology sector since the summer, cost-cutting measures are multiplying across the landscape of listed companies.
The coming months “will be difficult for companies”, warns Tom Cahill, with a deterioration in the economy against a background of still high inflation, which could affect the results and margins of companies.
The bad news from Micron has cast a chill over the entire electronics component industry, from the graphics card maker Nvidia (NVDA, -7.04% to US$153.39) to chip specialists Intel (INTC, -3.21% to US$25.97) and Qualcomm (QCOM, -3,41% à 110,68$ US).
Beyond that, the whole technological galaxy has been turned upside down, in particular Amazon (AMZN, -3.43% to US$83.79), Microsoft (MSFT, -2.55% to US$238.19) and Apple (AAPL, -2,38% à 132,23$ US).
In tune, Tesla resumed its slide (TSLA, -8.88% to US$125.35). The electric vehicle maker’s stock fell Thursday to its lowest level since September 2020.
Deutsche Bank analysts on Thursday lowered their estimates for Tesla’s results for the current quarter and foresee a difficult environment in the short term, linked in particular to the decline in demand.
They also see as a negative element the “noise related to the recent acquisition of Twitter” by Elon Musk.
The movie theater chain AMC (AMC, -7.36% to $ 4.91 US) tumbled after unveiling, Thursday before market, a capital increase of 110 million dollars fully subscribed by the investment company Antara Capital. The latter also agreed to convert into shares 100 million dollars of AMC debt securities that it already held.
Airlines have suffered from the arrival of a winter storm that was expected to affect most of the United States, particularly the north-central, in the midst of major travel for the holidays.
Hundreds of flights have already been canceled Thursday, in particular from or to the two airports of Chicago (Illinois) and that of Denver (Colorado), according to the specialized site FlightAware.
Delta (DAL, -2.23% to US$32.92), Southwest (LUV, -3.11% to US$35.46) or even American Airlines (AAL, -3.61% to US$12.56) all ended far into the red.