A roundup of Thursday’s stock market results across the Americas
🌎 Latin American markets closed mixed:
On a mixed day in the reigon, Colombia’s Colcap (COLCAP) posted the sharpest losses on Thursday, while Argentina’s Merval (MERVAL) once again led the gains, climbing 0.90%, powered by the shares of Mirgor (MIRG), Transportadora de Gas del Sur (TGSU2) and Banco de Valores (VALO).
The Colcap suffered after the shares of Grupo Argos SA (PFGRUPOA), Grupo Energía Bogotá (GEB) and Grupo Nutresa (NUTRESA) closed lower.
In an interview Thursday, the future CEO of what will become the world’s third-largest lithium producer said the new company will focus on creating a supply chain in America, considering that US automakers are looking for sources other than China.
“Focusing on the US makes a big difference for us with customers and investors,” Paul Graves said, a day after it was announced that Livent Corp. will merge with Allkem Ltd. to create a $10.6 billion company. The company, as yet unnamed, will bring together lithium assets from Argentina, Canada and Australia, allowing it to meet growing Western demand.
🗽On Wall Street:
Stocks ended the day mixed, while Treasuries rallied after data signaling a cooling jobs market and renewed concerns about the health of regional lenders drove demand for safe havens.
The S&P 500 slid 0.2% on Thursday after jobs and inflation data while the Nasdaq 100 added 0.3%. Alphabet Inc. buoyed the tech-heavy benchmark after the Google parent company showcased its artificial intelligence tools. News Corp. shares jumped 4.7% in postmarket trading after third quarter results topped analysts’ estimates.
The Dow Jones industrial Average dropped 0.66%, but the Nasdaq 100 Composite pulled clear to close 0.18% higher.
Data showed US initial jobless claims reached the highest since October 2021 while producer prices rose 0.2% in April, trailing economists’ estimates for a 0.3% increase. The reports signal the Federal Reserve’s policy-tightening campaign may finally be having an effect on inflation as the central bank walks a tightrope between reining in rising prices and tipping the economy into a downturn.
“Inflation has peaked and is trending lower as growth weakens,” according to Don Rissmiller, chief economist at Strategas. The data support a Fed pause, he said, though there are other risks.
“While the US does not appear to be in recession right now, there are some signs of cracks starting to appear, and global pressures remain,” he wrote.
Haven assets traded stronger, with the dollar rising and Treasury yields falling. The policy-sensitive two-year rate fell to 3.9%, while 30-year bonds extended a rally following a stronger-than-expected auction.
Swaps traders are pricing in more than 75 basis points of cuts in 2023 after this week’s economic reports, which included a slightly better-than-expected consumer price readout on Wednesday.
“Today’s data is a step in the right direction from the Fed’s perspective,” Kara Murphy, chief investment officer of Kestra Investment Management, said in an interview. “But these numbers are really volatile week-to-week and we’re coming off of extraordinarily strong levels. There’s a lot more that has to happen.”
Economic indicators are “moving in the right direction, but none of it is enough to say that the Fed’s job is done,” she added.
Sentiment seemed fragile with investors still worried about the US debt-ceiling and stability of the banking industry. A Friday meeting between President Joe Biden and House Speaker Kevin McCarthy was postponed as staff negotiations continued.
In the options market, hedges against volatility are seeing the most demand in five years.
PacWest Bancorp dropped 23% and was the worst performing regional lender after deposits fell 9.5% last week. “The news headlines increased our customers’ fears of the safety of their deposits,” the company said in a regulatory filing Thursday.
Big banks were also weak after the Federal Deposit Insurance Corp. said larger lenders will face billions of extra fees to replenish the agency’s insurance fund.
Jamie Dimon said “we need to finish the bank crisis,” in a Bloomberg Television interview, adding regulators should do “whatever they need to do to make it better.” JPMorgan’s chief executive officer predicted more regulations were ahead for lenders.
Elsewhere, industrial metals prices fell on the back of economic data pointing to economic weakness in China. Copper plumbed its lowest since January.
The Bank of England raised its benchmark lending rate to the highest level since 2008 and said further increases may be needed if inflationary pressures persist.
The Bloomberg Dollar Spot Index rose 0.5%, the euro fell 0.6% to $1.0917, the British pound fell 0.9% to $1.2513 and the Japanese yen fell 0.1% to 134.54 per dollar.
🍝 For the dinner table debate:
Elon Musk said he will leave the top job at Twitter and become its executive chairman and chief technology officer. The billionaire owner of the social network said a new chief executive, whom he did not name, will start in about six weeks.
Musk bought Twitter (TWTR) for $44 billion last October and indicated he would only be in charge for a limited time to complete the organizational overhaul he thought the company needed to thrive. Musk complained of having “too much work” and sleeping at Twitter’s San Francisco headquarters while implementing sweeping changes. He also changed the corporate name of Twitter’s parent company to X Holdings.
Musk, who is also CEO of Tesla Inc (TSLA) and Space Exploration Technologies Corp, has drawn criticism for his abrupt policy changes and neglect of his other businesses.
The next CEO will have to deal with an exodus of advertisers and a shaky subscription service plan. Musk has also cut thousands of jobs and reduced the company’s content moderation.
Leidys Becerra, a content producer at Bloomberg Línea, and Peyton Forte and Emily Graffeo of Bloomberg News, contributed to this report.