:quality(75)/cloudfront-us-east-1.images.arcpublishing.com/bloomberglinea/7N7OVSHAPFB4XNE6UO23HLHXIY.jpg "The Santiago Stock Exchange in downtown Santiago, Chile. Photographer: Cristobal Olivares/Bloomberg")
A roundup of Tuesday’s stock market results from across the Americas
🌎 Chile’s IPSA gains 0.5%:
WIth the exception of Chile’s IPSA index (IPSA), which gained 0.50%, Latin America’s markets closed lower on Tuesday.
Colombia’s Colcap (COLCAP) and Mexico’s S&P/BMV IPC (MEXBOL) slipped 1.09% and 1.03% respectively.
Colombia’s index was affected by the falls in shares of Grupo Argos S.A. (GRUPOARG), which slid 5.11%, and Ecopetrol (ECOPETL), which fell 3%.
Colombian President Gustavo Petro’s labor reform proposals suffered a strong defeat in Congress, with the session halted due to lack of sufficient legislators. The bill will now be discussed during the next legislative period.
Peru’s S&P/BVL (SPBLPGPT) and Brazil’s Ibovespa (IBOV) fell 0.15% and 0.20% respectively.
Chile’s central bank lowered its growth forecast for this year, predicting a GDP contraction of 0.5%, with growth expected to be between 1.25% and 2.25% in 2024 and between 2-3% in 2025.
🗽On Wall Street:
Stocks edged down Tuesday as the second-quarter rally cooled with investors jittery ahead of Powell’s testimony later in the week. Treasuries rose.
The S&P 500 notched its first two-day losing streak in four weeks as the US equities benchmark traded off recent 14-month highs. The Nasdaq 100 ended the session little changed as shares of Tesla Inc. buttressed the tech-heavy gauge from deeper losses. Economic bellwether FedEx Corp. tumbled 5% in afterhours trading after 2024 outlook fell short of analysts’ highest estimates on weakened demand.
Investors caught between fear of missing out and concerns markets have run too far, too fast are contending with overblown valuations and hawkish signals from the Federal Reserve.
The AI frenzy which has been driving much of the recent gains, is sure to be a topic during second-quarter conference calls. “The issue is going to be: to what degree does that show up in fundamentals?” Scott Chronert, global markets strategist at Citigroup, told Bloomberg Television.
“What we’re going to run into is this disconnect with how hard the market has run versus where earnings expectations are,” he said.
The path of US monetary policy is another wild card. Federal Reserve Chair Jerome Powell will give his semi-annual report to Congress on Wednesday. Policymakers at the Fed kept interest rates unchanged at their latest meeting but warned of more tightening ahead. Investors also await the outcome of policy meetings in Turkey, the UK and Switzerland.
The US dollar advanced, while in global currencies the Swedish krona slumped to a record low against the euro as traders expect the Riksbank to tap the brakes on rate hikes in coming months.
Gold and oil retreated after disappointment over China’s stimulus measures. US-listed Chinese stocks also tumbled with Alibaba Group Holding Ltd. dropping about 4.2% following the surprise replacement of its chief executive and chairman.
The Bloomberg Dollar Spot Index rose 0.1%, the euro was little changed at $1.0913, the British pound fell 0.2% to $1.2762 and the Japanese yen rose 0.4% to 141.46 per dollar.
🍝 For the dinner table debate:
Morgan Stanley’s (MS) Michael Wilson, one of Wall Street’s most bearish strategists, remains unconvinced by the recent bullish sentiment in the equity market, and warns that investors may be in for a “rude awakening.”
Although his earlier prediction of a market crash in 2023 has yet to materialize, Wilson believes the second half of the year will be difficult for the US equity rally due to several factors.
According to Wilson, fading fiscal support, reduced liquidity and declining inflation will put downward pressure on the market. He expresses concern about the current state of equities, describing them as “stretched to the limit.” He attributes the tight market performance to the influx of excess liquidity resulting from the bank deposit bailouts implemented in March.
“Given our fundamental view on growth, we find it difficult to get on board with the current enthusiasm,” Wilson wrote in a note Tuesday.
Sebastián Osorio Idárraga, a content producer at Bloomberg Línea, and Peyton Forte and Isabelle Lee of Bloomberg News, contributed to this report.
