A roundup of Thursday’s stock market results from across the Americas
🌎 Brazil leads on day of mixed results in LatAm:
Colombia’s Colcap (COLCAP) saw the deepest loss, closing 1.09% lower, dragged down by the shares of BanColombia (BCOLO), Banco Davivienda (PFDAVVND) and Interconexión Eléctrica (ISA). Peru’s index (SPBLPGPT) dropped 0.76%.
🗽On Wall Street:
US stocks rose Thursday as a rally in companies linked to the frenzy in artificial intelligence outweighed broader market concerns including a US debt default.
The S&P 500 gained 0.9% while the tech-heavy Nasdaq 100 added 2.5% after a bullish sales forecast from Nvidia Corp. ignited gains in the technology sector.
Shares of Nvidia soared 24% after the company’s forecast related to AI surprised even the most optimistic analysts on Wall Street, propelling the company to the cusp of a $1 trillion market value.
It’s another sign that investors are willing to pile into promising tech stocks, despite the growing worries about China’s economy and a potentially catastrophic US debt default. Fitch Ratings warned that the US’s AAA rating is under threat, though it still expects politicians will reach an agreement before time runs out.
“Between the debt ceiling and AI, everything else is kind of dwarfed by the magnitude of those two things,” said Louise Goudy Willmering, partner at Crewe Advisors LLC.
Treasury-bill yields slated to mature early next month edged higher as investors continued to demand a premium on securities seen most at risk of non-payment if the government exhausts its borrowing capacity. The wrangling in Washington adds to the risks assessed by Federal Reserve officials as they consider pausing interest rate increases.
Traders are now fully pricing in another quarter-point hike within the next two policy meetings after the release of mixed data on Thursday, including a higher revised first-quarter GDP and fewer-than-expected jobless claims.
“Nvidia was last night’s good surprise,” said Gilles Guibout, head of European equity strategies at Axa Investment Managers. “But more broadly, there are few reasons for the market to keep rising: interest rates are not going down, global economic growth isn’t rebounding, full-year earnings are seen flat, and stock valuations are already at a decent level.”
In corporate news, Dish Network Corp. gained 7.1% on a report of talks to offer mobile plans on Amazon. And Snowflake Inc. dropped 17% after the cloud-software company cut its product revenue guidance for the full year.
Elsewhere, in Asian markets, sentiment continued to worsen. The Hang Seng Index shed 1.9% on the day and the yuan broke through the closely-watched 7-per-dollar level.
The key worry for investors is that China’s economy is losing momentum and there are persistent financial troubles in the real estate sector. Recent data suggest GDP growth this year will be closer to the government’s target of about 5%, contrary to expectations of a large overshoot formed earlier in the year.
Meanwhile, traders added to bets the Bank of England will keep raising interest rates after an unexpectedly strong reading of UK inflation on Wednesday. Money markets are now pricing more than 100 basis points of additional tightening by December. The Europe Stoxx 600 ended the day 0.3% lower.
The Bloomberg Dollar Spot Index rose 0.3%, the euro fell 0.3% to $1.0721, the British pound fell 0.4% to $1.2318 and the Japanese yen fell 0.5% to 140.17 per dollar.
🍝 For the dinner table debate:
Risks are affecting the US dollar’s position as the world’s dominant currency at present, but for various observers such as Moody’s these challenges would not be critical in the short term; therefore, the possibility of the greenback losing its crown is still far from materializing.
Moody’s Investors Service has a message: the greenback is likely to keep its crown no matter what. While the agency that monitors the credit standing of governments and corporations expects a more multipolar monetary system to emerge in the coming decades, it also expects such changes to be led by the greenback because its challengers will find it difficult to fully replicate its scale, security and convertibility. These last three characteristics are fundamental to the changes that may occur in the monetary system going forward.
Notwithstanding such warnings, Moody’s hopes that US authorities can reach an agreement before it is too late to raise or suspend the debt limit in order to avoid the dreaded default, which would be an historic scenario for the US. But the agency does warn that the increased polarization of the domestic political environment over the past decade “has weakened both the predictability and effectiveness of US policymaking”.
Paola Villar S., a content producer at Bloomberg Línea, and Isabelle Lee, Julien Ponthus and Lynn Thomasson of Bloomberg News, contributed to this story.