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MARKET REVIEW. The strength of the financial and base metals sectors allowed the flagship index of the Toronto Stock Exchange to advance late Wednesday morning, while the major American stock indices also advanced.
The New York Stock Exchange opened slightly higher on Wednesday, without a clear reaction to the publication of a highly anticipated price index, which confirmed an expected rebound in inflation linked to energy prices.
To (re)consult market news
Stock market indices at noon
In Toronto, the S&P/TSX gained 59.82 points (+0.30%) to 20,278.10 points.
In New York, the S&P 500 rose by 12.49 points (+0.28%) to 4473.69 points.
THE Nasdaq gained 54.74 points (+0.40%) to 13,825.20 points.
THE DOW increased by 50.02 points (+0.14%) to 34,696.01 points.
THE loon rose by US$0.0012 (+0.1560%) to US$0.7385.
THE oil took US$0.04 (+0.05%) to US$88.88.
L’gold fell by US$2.80 (-0.14%) to US$1932.30.
THE bitcoin gained US$45.95 (+0.18%) to US$26,238.79.
The context
The CPI price index was up 0.6% over one month in August, as expected, but at 3.7% over one year, compared to 3.2% in July. This is more than the 3.6% expected by economists.
The jump is mainly explained by that of energy prices, which increased by 10.5% over one month.
But investors were more aware of the deceleration of the underlying index (core), excluding energy and food, to 4.3% over one year, compared to 4.7% previously.
“We expect that Fed (American central bank) officials will ignore the rise in the CPI,” commented Nancy Vanden Houten of Oxford Economics. “This report does not change our view that the Fed will keep rates on hold through the end of the year.”
The phlegmatic reaction of the bond market confirmed that the report had been generally well received.
The yield on 2-year US government bonds, more representative of monetary policy expectations than its 10-year equivalent, eased to 4.99% compared to 5.02% the day before at close.
“The key is that the trend remains toward a slowdown in inflation (excluding energy and food), and that doesn’t change the fact that the Fed will probably take a break at its September meeting,” the week next time, reacted Peter Cardillo, of Spartan Capital.
As for the November meeting, “the next inflation figure will be crucial,” the analyst anticipates. “If inflation remains stubborn, they will raise (the key rate) in November.”
The CPI index published on Wednesday does not seem to have offered operators a reason to emerge from the torpor they have been trapped in for several weeks.
“The market will probably continue to evolve little,” estimates Peter Cardillo, who recalls that “September is a difficult month” for stocks, based on historical data. “They’re going to wait to see what the Fed does and how the yield curve evolves.”
As very often since the start of the year, the giant capitalizations of the technology sector dictated the trend, in particular Microsoft (MSFT, +0.99%), Amazon (AMZN, +1.26%), Meta (META, +1.37%) And Tesla (TSLA, +2.08%).
American Airlines (AAL, -4.65%) was the victim of an air hole after a profit warning linked, according to the company, to the rise in the price of kerosene. The Fort Worth (Texas) group expects to see its margins compressed and is now counting on a profit divided by three to four compared to its previous forecasts.
The low cost company Spirit Airlines (SAVE, -1.47%) also reduced its margin forecasts, again due to the acceleration in fuel prices, but also due to promotions on flights planned for the second half of the year.
The encouraging clinical results of a new messenger RNA vaccine against influenza, published on Wednesday, Moderna (MRNA, +5.23%).
The newcomer T.K.O.the result of the merger of the media and representation group Endeavor with WWE, folded (TKO, -1.33%) for its second day of trading. The group controls the WWE wrestling league and the UFC mixed martial arts championship, two circuits with immense popular success.
Despite the prospect of a strike on Friday, due to the impasse in negotiations on the renewal of collective agreements, the automobile sector did better than resist.
Ford (F, +2.09%) And General Motors (GM, +0.84%) were both moving clearly in the green, supported by comments from analysts, who believe that the impact of a work stoppage has already been integrated by the market.
