Brazil’s Ibovespa Leads LatAm Market Gains; NYSE Closes Mixed

A roundup of Tuesday’s stock market results from across the Americas

👑 Brazil’s Ibovespa leads in LatAm:

Latin American stock markets closed mixed again on Monday, with Brazil’s Ibovespa (IBOV) enjoying the highest gains in the region after ending the day up 1.16%, with Vale (VALE3) and Magazine Luiza (MGLU3) shares leading the way.

The non-basic consumer products, health and information technology sectors drove the good performance of the indicator.

In the day’s agenda, the Expanded National Consumer Price Index 15 (IPCA-15), considered a preview of the country’s official inflation, accelerated and rose 0.55% in January, higher than expected by the financial market. In the accumulated 12-month period, the increase was 5.87%, according to the Brazilian Institute of Geography and Statistics.

The index may influence the decision of the Monetary Policy Committee (Copom), which meets next week, on January 31 and February 1, amid worsening inflation expectations with fiscal risks and President Lula’s criticism of the Central Bank and its targets.

At the corporate level, investors continue to closely monitor American shares (AMER3). On Tuesday, Itaú Unibanco (ITUB4), one of the retailer’s creditors, responded to the company’s attempt to blame the banks for the group’s accounting problems.

📉 A bad day for Colombia’s COLCAP:

Colombia’s COLCAP (COLCAP) index had the sharpest losses for the second consecutive day, falling 1.60%, dragged down by the performance of the energy, utilities and materials sectors.

The shares of Banco de Bogotá (BOGOTA), Mineros SA (MINEROS) and Canacol Energy (CNEC) suffered the largest declines of the day.

Today it was learned that the Securities Market Self-Regulator expelled from the Colombian market three stockbrokers who carried out unfair operations in foreign exchange with the purpose of favoring a group of clients at the expense of others who were also advised by them.

The three traders who will no longer be able to work with entities participating in the Colombian financial market are Álvaro Guiovanni Pinilla Jara, Yolanda Patricia Pinilla Jara and Guillermo Andrés Cangrejo Jiménez.

The Securities Market Self-Regulator opened an investigation against the three accused by order of August 10, 2021, after finding a set of 339 operations in the securities market, which would have some common characteristics, among which it was highlighted to have generated profits to a group of investors, who at the time of the investigated facts were attended by Guillermo Andrés Cangrejo Jiménez.

El Colcap (COLCAP) fue, por segundo día consecutivo, el índice de la región con mayores descensos entre sus pares de la región. La bolsa colombiana cedió un 1,60% arrastrado por el comportamiento de los sectores de energía, servicios públicos y materiales.

🗽On Wall Street:

Wall Street saw some buyer fatigue after a solid equity rally, with investors scouring a batch of earnings for clues on the outlook for Corporate America amid mounting fears about a recession.

The NYSE closed mixed, the S&P 500 slipping 0,07% in Tuesday’s trading, and the Nasdaq Composite (CCMPDL) down 0.27%, while the Dow Jones Industrial Average climbed 0.31%.

In late trading, a $151 billion exchange-traded fund tracking the Nasdaq 100 (QQQ) climbed as Microsoft Corp.’s earnings beat analyst estimates. Texas Instruments Inc., one of the world’s largest chipmakers, suffered its first sales decline since 2020 and gave a tepid forecast for the current quarter, hit by an industry slump.

In the run-up to the tech earnings season, a few other bellwethers reported their numbers. The Dow Jones Transportation Average fell on disappointing results from Union Pacific Corp. 3M Co., the maker of Post-it notes, forecast profit that trailed estimates and said it plans to cut jobs. Homebuilder D.R. Horton Inc. beat projections.

A combination of mixed earnings and economic numbers is making investors hesitant to take on more risk particularly after an equity surge that drove the S&P 500 up more than 10% from its mid-October low. US business activity contracted for a seventh month, though at a more moderate pace, while a measure of input prices firmed in a sign of lingering inflationary pressures.

“You have to ask: Have investors taken stocks to levels that can’t be supported by what we are about to hear?” wrote Kenny Polcari, senior market strategist at Slatestone Wealth.

Corporate highlights:

• The US Justice Department and eight states sued Alphabet Inc.’s Google, calling for the break up of the search giant’s ad-technology business over alleged illegal monopolization of the digital advertising market.
• General Electric Co. continues to grapple with lingering issues in its renewable energy business, even as the slimmed-down manufacturer says strong demand for air travel will help boost overall profits this year.
• Johnson & Johnson guided to stronger earnings for 2023 than analysts were expecting after a year in which the pharma division suffered because of waning demand for its unpopular Covid-19 shot.
• Halliburton Co. boosted its dividend 33% as the world’s biggest provider of fracking services follows its oil-and-gas clients by expanding shareholder returns amid tight global supplies for crude.
• Verizon Communications Inc.’s profit outlook trailed Wall Street estimates in a sign that the consumer wireless business continues to weigh down performance.

The popping of the bubble in US stocks is far from over and investors shouldn’t get too excited about a strong start to the year for the market, warns Jeremy Grantham, the co-founder and long-term investment strategist of GMO.

“The range of problems is greater than it usually is — maybe as great as I’ve ever seen,” Grantham added.

A strong start to the year for US tech stocks is facing a pair of technical roadblocks.

The recent Nasdaq 100 rally has left the gauge just below the 23.6% Fibonacci retracement of its 2021 record high and September low. That level acted as resistance three different times late last year, with rallies fading just above it each time. Even if it does manage a successful break, it will then face a test of its 200-day moving average, a line it hasn’t traded above in nearly a year.

The New York Stock Exchange said some trades will be declared “null and void” after determining a “system issue” resulted in a group of securities commencing trading without an opening auction price.

The exchange said that the trades will be reviewed as “clearly erroneous” under NYSE rules. That applies to trades in certain securities that did not conduct an opening auction, that occurred after the 9:30 a.m. bell but before certain pricing levels were set, and were executed further from the reference price, NYSE said in an updated statement on its website.

Now with the Federal Reserve’s Feb. 1 rate decision about a week away, traders in the options market are contemplating a scenario in which the rate hike it’s expected to deliver ends up being the last one of the tightening cycle.

The swap market is pricing around 48 basis points of rate hikes over the next two policy meetings. That implies a small chance — approximately 8% — that if the Fed raises its benchmark rate by a quarter point next week, it could be the central bank’s final move in a tightening cycle that has marked the most aggressive action against inflation in several decades.

“It’s almost like people are trying to project forward toward the end the Fed tightening policy and trying to find a bottom here and a new bull-market rally,” said Jerry Braakman, chief investment officer of First American Trust. “But that’s in light of deteriorating economic statistics and I think that’s a little premature.”

On the currency markets, the Bloomberg Dollar Spot Index was little changed, the euro was little changed at $1.0882, the British pound fell 0.4% to $1.2335 and the Japanese yen rose 0.4% to 130.17 per dollar.

🔑 The day’s key events:

Oil erased the gains of the last few sessions, which could indicate a gloomy short-term outlook for energy traders.

West Texas Intermediate closed with a drop of almost 2%, the largest since the first week of January. WTI for March delivery settled at $80.09 a barrel in New York; while Brent for March settlement also settled at $86.18 after falling 2.28%.

Oil succumbed to general market pressure after disappointing results from a handful of economic activity indicators led investors to shy away from risk. Those results have tempered optimism about the economy in the near term, said Edward Moya, market analyst at OANDA. “That has caused oil prices to give up some of their recent gains.”

Traders will continue to watch other results for clues that may identify China’s economic outlook. Soon, many will be analyzing results from multinationals such as Tesla Inc (TSLA), as well as oil giants Chevron Corporation (CVX) and Exxon Mobil Corporation (XOM) to get a sense of how they view demand in the largest importer of crude oil.

🍝For the dinner table debate:

Under the command of new owner Elon Musk, Twitter Inc (TWTR) stopped paying rent on its San Francisco headquarters in December, according to a lawsuit filed by the landlord.

The social media company failed to pay $3.36 million in December rent for its offices at 1355 Market Street and $3.42 million in January dues. Sri Nine Nine Market Square LLC, the building’s landlord, asserted the fact in a lawsuit filed Monday in state court in California.

Since taking over Twitter, the billionaire has been cutting costs. He has laid off half the staff, withheld rent on other company offices around the world and refused to pay some outstanding bills, such as an airplane lease. These moves come as Musk faces the first payment on the US$12.5 billion debt he incurred to acquire Twitter.

The lawsuit also comes with Musk on the witness stand in a securities fraud trial in San Francisco, where he is defending his tweet to take Tesla Inc. private. He is scheduled to return Tuesday to complete his testimony.

Leidys Becerra, a content producer at Bloomberg Línea, and Rita Nazareth of Bloomberg News, contributed to this report.