A roundup of Tuesday’s stock market results from across the Americas
🌎 Mexico’s market posts the sharpest losses in Latin America:
On the Mexican stock exchange, Genomma Lab (LABB) led the losses, dropping 3.70%, followed by the shares of América Móvil (AMXB), which dropped 3.72%, and the shares of Megacable Holdings (MEGACPO), which slipped 0.80%.
Brazil’s Ibovespa was buffeted by the shares of Cia. Siderúrgica Nacional (CSNA3), which dropped 3.77%, and those of Usinas Siderúrgicas de minas (USIM5), dropping 2.88%, and CSN Mineracao (CMIN3), which slipped 2.84%.
🗽On Wall Street:
Stocks treaded water after a rally fueled by the artificial-intelligence hype drove the market to its highest since August. Treasury yields fell on hopes the US Congress will pass a debt deal to head off a default.
The S&P 500 closed little changed, while remaining slightly above 4,200. Energy companies weighed on the index as oil sank below $70 a barrel. The Nasdaq 100 extended this year’s surge to 31%, with Nvidia Corp. hovering near $1 trillion in value after announcing several AI-related products. A gauge of megacaps like Apple Inc. and Tesla Inc. climbed 1.5%.
“Yes, AI does have great potential and it does appear to be the ‘next big thing’,” wrote Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. “But I don’t see how that promise can offset the reality of higher interest rates and more pressure on the economy, at least not for a sustainable period.”
In late trading, Hewlett Packard Enterprise Co. retreated after projecting sales that fell short of analysts’ projections, fueling fears of slowing growth as the company works through pandemic-era backlogs.
US bond yields slumped as investors evaluated the possible economic consequences of the holiday weekend accord to temporarily suspend the federal debt ceiling.
Benchmark 10-year rates tumbled 10 basis points to 3.7%. The two-year yield, more sensitive than longer maturities to the outlook for Federal Reserve policy, slipped to around 4.5%.
Stocks and bonds are sending opposite signals about whether US inflation will abate on its own, according to billionaire Cliff Asness, who called the divergence his “biggest concern.”
Unlike stocks, the bond market is telegraphing that the Federal Reserve will make aggressive interest-rate cuts over the next year or two, the co-founder of AQR Capital Management, said on an episode of “Bloomberg Wealth with David Rubenstein.”
“If inflation stays sticky or it comes down because we enter a nontrivial recession — it’s equities that I think are a scary place,” Asness said.
Fed Bank of Richmond President Thomas Barkin said he is looking for signs that demand is cooling to be convinced that US inflation will ease.
Traders also kept an eye on the latest economic reports, with US consumer confidence dropping to a six-month low as views about the labor market and the outlook for business conditions slipped ahead of a deal to raise the debt ceiling.
To Gina Bolvin, president of Bolvin Wealth Management Group, lower consumer confidence can be a bullish contrarian indicator.
“With over $5 trillion in cash on the sidelines, strong stock market momentum and debt ceiling drama closer to resolving, we think there is a good reason for stocks to perform well this year,” Bolvin said. “However, it may not be without volatility. The next market moving catalyst is this week’s jobs reports, which will influence the Fed.”
On the currency markets, the Bloomberg Dollar Spot Index was little changed, the euro rose 0.2% to $1.0732, the British pound rose 0.4% to $1.2409 and the Japanese yen rose 0.5% to 139.80 per dollar.
🍝 For the dinner table debate:
How is the situation for startups in Latin America? The latest version of the Global Startup Ecosystem Index 2023, a study that analyzes which are the friendliest environments for the development of startups in more than 1,000 cities and 100 countries in the world, was released on Tuesday, and the document revealed some interesting figures about different countries in the region that show that there is still a challenging ecosystem to face in these local markets.
The report addresses, among other points, the difficulties faced by these companies in Latin America and the Caribbean, as it is detailed as the region with the lowest amount of financing in 2023, capturing only 2.2% of the global total.
During 2022, in fact, the region received about 3% of the financing in these companies: Brazil with 43.1%, Mexico with 14.2% and Colombia, with 13.4%, captured more than 70% of Latin America’s financing, highlighted the study by the firm StartupBlink.
The report also revealed that the trend was reversed, as the top-ranked countries in the region dropped in the index, with the exception of Colombia. Meanwhile, the number of Latin American countries among the world’s top 100 remained the same as last year, with a total of 11.
Paola Villar S., a content producer at Bloomberg Línea, and Rita Nazareth of Bloomberg News, contributed to this story.