A roundup of Monday’s stock market results from across the Americas
🌎 Latin American markets closed mixed:
Latin American stock markets closed mixed on Monday, with gains led by Mexico’s S&P/BMV IPC (MEXBOL), which climbed 0.57%, and Brazil’s Ibovespa (IBOV), which advanced 0.52%.
On Monday, the Brazilian Ministry of Agriculture reported the detection of avian flu iin two birds in the wild on the Espirito Santo coast, in the southeast of the country. Brazil is home to several of the largest producers in the poultry sector, including BRF S.A. (BRFS3) and JBS S.A. (JBSS3).The share price of both companies dropped Monday.
Meanwhile, Colombia’s Colcap (COLCAP) and Argentina’s Merval (MERVAL) closed with losses of 0.95% and 0.29%, respectively.
The Colombian economy grew 3% in the first quarter of 2023, according to the country’s statistics agency DANE, and which exceeded expectations of analysts consulted in a recent survey by Banco de la República, and who had foreseen growth of 2.58%.
🗽On Wall Street:
The stock market remained stuck in a tight range, with investors waiting for clarity on whether Washington lawmakers will be able to reach a deal to avert a US default.
Equities saw small gains ahead of a meeting between President Joe Biden and House Speaker Kevin McCarthy — with both sides sending mixed signals. In late trading, a $382 billion exchange-traded fund tracking the S&P 500 was little changed after Treasury Secretary Janet Yellen reiterated her department could run out of cash as soon as June 1 unless Congress raises or suspends the federal debt limit.
Stocks fell earlier Monday as data showed New York manufacturing plunged the most since April 2020. This week’s figures will likely underscore more economic weakness, emboldening the Fed’s dovish voices even though inflation has failed to reassure, according to Anna Wong at Bloomberg Economics. Two Federal Reserve officials indicated they favored pausing rate hikes.
Results from retailers such as giant Walmart Inc. will also be highly scrutinized over the next few days.
The Nasdaq Composite (CCMPDL) gained 0.65% on Monday, the S&P 500 0.30% and the Dow Jones Industrial Average 0.14%.
“There is little conviction on either side as the market continues to digest earnings, a slew of economic data, and finger-pointing in Washington regarding the debt ceiling discussions,” said Craig Johnson, chief market technician at Piper Sandler.
To Chris Larkin at E*Trade from Morgan Stanley, it’s fair to ask whether the low equity volatility suggests the market is being too complacent — especially after the S&P 500 notched its narrowest non-holiday weekly range since August 2021.
“A debt default may not be the most likely scenario, but any prolonged debate or unexpected development has the potential to trigger higher volatility,” he noted.
JPMorgan Chase & Co.’s Marko Kolanovic joined a chorus of Wall Street strategists Monday in warning that the US debt-ceiling impasse is yet another headwind threatening the outlook for equity markets.
Morgan Stanley’s Mike Wilson delivered a similar warning on the debt-ceiling deadline, noting the bank’s clients said the issue is unlikely to be resolved without some near-term volatility. Meanwhile, BlackRock Investment Institute’s Jean Boivin and Wei Li said they expect a potential debt showdown to trigger renewed volatility.
The Bloomberg Dollar Spot Index fell 0.3%, the euro rose 0.2% to $1.0875, the British pound rose 0.6% to $1.2530 and the Japanese yen fell 0.3% to 136.06 per dollar.
🍝 For the dinner table debate:
The pace of the Fed’s monetary tightening, the fastest in decades, and negative sentiment on social media contributed to Silicon Valley Bank’s collapse, according to Greg Becker, the company’s former CEO.
“The Fed’s message was that interest rates would remain low and that the inflation that was beginning to bubble up would only be ‘transitory,’” Becker says in written testimony prepared for a U.S. Senate Banking Committee hearing Tuesday focused on Silicon Valley Bank and Signature Bank, which came under regulator oversight in March.
“In fact, between early 2020 and the end of 2021, the banks collectively purchased nearly $2.3 trillion in investment securities in this low-yield environment created by the Federal Reserve,” he said.
Silicon Valley Bank worked primarily with tech startups, and its focus on the sector, along with long-term bonds that lost value as U.S. interest rates rose, made it especially vulnerable to a bank run that led regulators to take over the lender. Its collapse catalyzed other runs, leading to Signature Bank meeting a similar fate days later, and the collapse of First Republic Bank.
Sebastián Osorio Idárraga, a content producer at Bloomberg Línea, and Rita Nazareth of Bloomberg News contributed to this report.