A roundup of Tuesday’s stock market results from across the Americas
👑 Argentina’s Merval leads in Latin America:
Latin American stock markets, for the most part, followed Wall Street’s behavior and remain attentive to the decisions to be taken by the Fed this week. Argentina’s Merval (MERVAL) and Brazil’s Ibovespa (IBOV) were the highest climbers on Tuesday, gaining 3.12% and 1.03%, respectively.
“After two consecutive rounds of declines, the Merval resumes its march and gains ground. The local stock market index has accumulated a 25% increase so far this year and does not seem to slow down its upward momentum. It is at 254,000 points and should overcome the 262,000 zone, which has been a resistance in the last two rises of the index, so that the trend does not weaken”, wrote Mauro Natalucci, account executive at Rava Bursátil, in a commentary.
Brazil’s Ibovespa closed January with a gain of 3.37%, boosted by the healthcare and non-basic consumer products sectors on Tuesday.
Colombia’s Colcap (COLCAP) gained 0.77% on the day; Mexico’s S&P/BMV IPC (MEXBOL), advanced 0.08%; and Peru’s S&P/BVL (SPBLPGPT) moved up 0.04%.
📉 A bad day for Chile’s IPSA:
Chile’s IPSA (IPSA) was the only index in the region to close lower, falling 0.29%.
Tech company and industrial shares saw the sharpest losses, with Sonda S.A. (SONDA) shares tumbling 4.33% and those of Cencosud Shopping S.A. (CENCOSUD) 2.87%.
Chile’s consumer price index could register an increase in January with respect to the previous month, according to analysts. A survey by the central bank of Chile, for which financial operators were consulted, indicates that consumer prices could rise by 0.5% in January. The same is estimated by economists from BICE and Banchile consulted by Bloomberg Línea. This would be the second consecutive month with a monthly CPI below 1%, which shows signs of a slowdown.
🗽On Wall Street:
US stocks ended January with a gain, as investors cheered signs of labor costs easing and inflation cooling as they gear up for Wednesday’s Federal Reserve decision. Traders continued to grapple with earnings after the stock market closed.
The Invesco QQQ Trust, a $153.6 billion exchange-traded fund tracking the tech-heavy Nasdaq 100, dropped in post-market trading after Electronic Arts Inc. gave a forecast for net bookings that fell short of analysts’ estimates. Snap Inc. also fell after forecasting its first-ever quarterly revenue decline.
However, Advanced Micro Devices Inc.’s better-than-expected sales forecast for the first quarter could still buoy tech shares, as investors brace for reports from Meta Platforms Inc. and Apple Inc. this week.
The S&P 500 still had its best month since October, as traders expect the Fed to slow its pace of interest-rate hikes. The Nasdaq 100 rallied the most this month since July. Treasuries gained, with the 10-year yield sliding to around 3.51%. It fell more than 30 basis points during January, the most since November. A dollar index dropped.
The S&P 500 and the Dow Jones Industrial Average gained 1.46% and 1.09%, respectively, while the Nasdaq Composite (CCMPDL) climbed 1.67%.
Investors are grappling with a flurry of economic data, earnings and rate decisions this week. Data on Tuesday showed prices in US housing market continued to cool, while another report highlighted consumer confidence unexpectedly falling. Hanging over everything is Wednesday’s Fed decision, with the central bank widely expected to raise rates by a quarter percentage point.
While Tuesday’s data from the Labor Department added to evidence that wage growth is slowing, it may still not be enough to sway the Fed. Investors will be watching for the tone officials set for future meetings. While Fed Chair Jerome Powell has repeatedly pushed back against hopes of rate cuts later this year, central bank officials could consider pausing rate hikes after their March meeting.
But the recent rally in stocks and bonds does not help the Fed’s bid to tighten financial conditions, said Jeff Muhlenkamp, portfolio manager at Muhlenkamp & Co.
Speaking about Powell’s presser Wednesday, he said “I expect that he will continue to try to talk the market into doing something that it is not currently doing.”
Investors also assessed a bevy of earnings reports on Tuesday. Shares of McDonald’s Corp. declined and those of Caterpillar Inc. fell the most since Sept. 23 after earnings misses. Meanwhile, General Motors Co. rose after posting upbeat forecasts. Exxon Mobil Corp.’s fourth quarter earnings per share beat estimates and the firm posted full-year profit that was the highest on record.
Now that investors have had a chance to parse a slew of economic reports and earnings results to start the year — with much of it coming in as expected — they’re focusing on what the Fed might do in the latter half of 2023, says Shawn Cruz, head trading strategist at TD Ameritrade.
“So I think we know where our baseline is now and what’s driving markets is Fed policy going into the second half of this year,” he said in an interview with Bloomberg.
On the currency markets, the Bloomberg Dollar Spot Index fell 0.2%, the euro rose 0.2% to $1.0872, the British pound fell 0.2% to $1.2328 and the Japanese yen rose 0.2% to 130.16 per dollar.
🔑 The day’s key events:
Oil benchmarks had a mixed performance on Tuesday. WTI crude oil rose 1.25% to $78.87 per barrel, while the Brent benchmark fell 0.48% to $84.49 per barrel.
However, the outlook could remain bullish for crude oil, amid expectations of a rate hike by the Federal Reserve and increased demand for crude from China following its economic reopening.
The market believes that crude oil is tracking the performance of the stock market, which showed signs of recovery as economic data pointing to a slowdown in inflation became more accurate. On the other hand, the OPEC+ advisory committee that will meet on Wednesday would not change its production outlook, which will give a bullish boost on crude prices, according to Bloomberg.
But after January’s results, oil completed a decline in seven of the past eight months. The commodity has also been hampered by its 100-day moving average.
🍝 For the dinner table debate:
Norway’s $1.3 trillion sovereign wealth fund reported its biggest loss since 2008 last year. Higher inflation, credit costs and the consequences of the Russian invasion were the main reasons.
Specifically, the fund lost 14.1% in 2022, about $164 billion, according to a statement on Tuesday. Overall, its total return was 0.88 percentage points higher than the benchmark against which it is measured.
“The market was affected by the war in Europe, high inflation and rising interest rates,” Nicolai Tangen, CEO of Norges Bank Investment Management, said in the statement.
“This negatively affected both the equity and bond market at the same time, which is very unusual. All sectors of the equity market had negative returns, with the exception of energy,” he added.
Sebastián Osorio Idárraga, a content producer at Bloomberg Línea, and Emily Graffeo and Vildana Hajric of Bloomberg News contributed to this report.