Argentina’s Merval Rebounds; NYSE Closes Lower as Tesla Stock Suffers Deep Drop

Latin American markets closed mixed on Thursday, while Wall Street closed lower amid signs of a weakening economy

A trader works on the floor of the New York Stock Exchange (NYSE). Photographer: Spencer Platt/Getty Images North America
By Bloomberg Línea
April 20, 2023 | 09:01 PM

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A roundup of Thursdays stock market results from across the Americas

🌎 Argentina’s Merval bounces back:

Latin American markets closed mixed on Thursday, with Argentina’s Merval (MERVAL) recovering from its Wednesday losses and leading the gains in the region, climbing 2.33% and driven up by the shares of Grupo Financiero Galicia (GGAL), Banco BBVA Argentina (BBAR) and Central Puerto (CEPU).

The country’s central bank once again raised the monetary policy rate, this time by 300 basis points, to 81% NER, following the 7.7% inflation rate for March released last Friday by statistics agency INDEC, with the annual rate now at 119.4%.

This is the second increase in the monetary policy rate validated by the central bank, presided over by Miguel Pesce, since the beginning of the year.

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The decision comes after March inflation came in at the highest for a month since April 2002 and in the midst of a strong exchange rate tension that sent the so-called ‘blue dollar’ and the MEP dollar to new historic highs in nominal terms.

The decision to raise the monetary policy rate is aimed at calming the levels of exchange rate tension that the country is going through and containing the rise in prices. But the flip side of this measure is that it will contribute to cool down an economy that, according to most private consulting firms, will contract during 2023.

🗽On Wall Street:

Stocks fell and bonds rose after data showed some softening in the labor market, housing and a gauge of business outlook. Traders also continued to wade through corporate earnings and comments from Federal Reserve speakers.

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The S&P 500 fell 0.60%, the Dow Jones Industrial Average 0.33% and the Nasdaq Composite (CCMPDL) 0.80%.

The tech-heavy Nasdaq 100 underperformed, with Tesla Inc. down around 10% after signaling it will keep cutting prices to stoke demand even after markdowns took a significant toll on profitability. The S&P 500 dropped ahead of Friday’s options expiration. The Cboe Volatility Index, or VIX, halted a six-day streak of declines.

The policy-sensitive two-year yield declined as much as 10 basis points to 4.14%. The dollar retreated against most of its developed-market peers.

Fed Bank of Cleveland President Loretta Mester signaled support for another rate hike to quell inflation while flagging the need to watch recent bank stress that could crimp credit and dampen the economy. Her Dallas counterpart Lorie Logan said inflation has been “much too high,” while outlining measures to watch.

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Recurring unemployment benefit claims jumped to the highest level since November 2021, adding to signs that the labor market is beginning to lose momentum. Sales of previously owned homes fell in March by more than forecast, underscoring a housing market that’s still on shaky footing despite some signs of stabilizing. US mortgage rates rose for the first time since early March.

“If the Fed stays the course, broad financial conditions should continue to tighten, the economy should decelerate into recession, and stocks should trade down sharply,” wrote Chris Senyek of Wolfe Research. “On the flip side, the biggest upside risk to our bearish call remains the Fed backing off way too soon! Although, if the Fed fails to sustainably bring down inflation, the ultimate pain will likely be much worse 12-24 months down the road.”

The Bloomberg Dollar Spot Index fell 0.1%, the euro was little changed at $1.0964, the British pound was little changed at $1.2436 and the Japanese yen rose 0.3% to 134.28 per dollar.

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🍝 For the dinner table debate:

Twitter’s “legacy” verification checks, those granted to personalities on the social network, have officially disappeared, and which obeys a promise made weeks ago by the social network’s owner Elon Musk to change the criteria for granting those checks to those who pay for them.

That means journalists, celebrities and other personalities who choose not to pay $8 per month have lost the check . The rule change was expected to spark a rebound in subscriptions, which Musk has said are key to the platform’s future revenue growth.

Twitter’s ad revenue has declined 50% between October and March, Musk tweeted last month. Currently, only about 1% of its users are subscribed to the program, dubbed Twitter Blue.

Leidys Becerra, a content producer at Bloomberg Línea, and John Viljoen and Robert Brand of Bloomberg News, contributed to this report.