A roundup of Tuesday’s stock market results from across the Americas
🌎 Argentina’s Merval leads LatAm gains:
In Latin America, almost all markets closed higher, with the exception of the main index of the Bogota Stock Exchange (COLCAP), which depreciated slightly at the close of the day. According to Credicorp Capital Bolsa, the worst performers were the preferred shares of Grupo Argos (-2.56%) and Grupo Argos (-1.84%).
The leading market of the day was Argentina’s Merval (MERVAL), which rose 1.03% after Monday’s fall. The leading stocks in the Argentine market were Telecom (TECO2), up 4.10%; Grupo Financiero Galicia (GGAL), up 2.71%; and Banco Supervielle (SUPV), up 2.60%, according to information from Rava Bursátil.
The Argentine index was followed by the selective index of the Santiago Stock Exchange (IPSA), which rose for the second consecutive session. The Chilean market rose by 0.95% to 6,411.38 points, again reaching record highs as Chilean stocks extend their gains.
Credicorp Capital Bolsa noted that the most traded shares of the day were those of SQM (around US$75 million) and Enel Americas (ENELAM) (around US$14 million). Among the best performers were Mall Plaza (MALLPLAZ), up 8.34%, and Empresas La Polar (NUEVAPOL), up 5.41%.
The Lima Stock Exchange (SPBLPGPT) also closed higher, driven mainly by gains in mining companies, and the S&P/BMV IPC index of the Mexican Stock Exchange (MEXBOL), which was up 0.92% at the end of the session.
🗽On Wall Street:
Big tech led gains in stocks on Tuesday, with traders counting on the earnings season to see whether the enthusiasm around artificial intelligence will justify this year’s market advance.
The S&P 500 closed at its highest since April 2022, the Nasdaq 100 outperformed and the Dow Jones Industrial Average saw its 12th straight advance — the longest winning run in over six years. In late trading, a $210 billion exchange-traded fund tracking the Nasdaq 100 (QQQ) climbed as Google’s parent Alphabet Inc. reported revenue that beat analysts’ expectations. Microsoft Corp. posted tepid sales growth, while Texas Instruments Inc. gave a lukewarm forecast.
With the S&P 500 just 5% away from its all-time high, elevated bullish positioning and indicators pointing to overbought levels, many investors are scouring earnings to make a decision on where to go from here. That’s especially true when it comes to big tech, with the Nasdaq 100 continuing to push higher even after an over $5 trillion rally that has spurred concerns about overstretched valuations.
“The next couple of weeks will be when the proverbial rubber hits the road for the Nasdaq 100,” said Matthew Weller, global head of research at Forex.com and City Index. “With the index still hovering near bull-market highs and up more than 40% on the year, investor expectations are clearly elevated — leaving little room for error.”
In other corporate news, Wells Fargo & Co. said its board authorized a new common stock repurchase program of up to $30 billion. PacWest Bancorp is merging with Banc of California as it seeks to navigate a bout of upheaval that brought down a handful of its peers. United Parcel Service Inc. reached a tentative labor deal with the Teamsters union, staving off a possible strike as soon as next week. General Electric Co. and 3M Co. reported earnings that blew past Wall Street’s expectations.
Fed countdown
On the eve of the Federal Reserve’s rate decision, strong consumer confidence data bolstered the soft-landing narrative — while suggesting policymakers aren’t done with their inflation fight yet. Rates on swap contracts continued to price in a quarter percentage-point Fed hike on Wednesday, with an additional 12.5 basis point increase factored in by year-end. That indicates a 50% likelihood of another quarter-point move.
Treasury two-year yields, which are more sensitive to imminent Fed moves, dropped five basis points to 4.87%. The dollar halted a five-day advance. Oil held its recent gains, helped by tighter supplies and optimism that China’s government will boost the country’s economy.
There are so many bulls in the US stock market that any disappointment on the economy or earnings poses a risk to the rally, according to Citigroup Inc. strategists. Investor exposure to the S&P 500 remains extended and one-sided, even after bullish momentum has waned in recent weeks, a team including Chris Montagu said.
Given that Wall Street had set a low bar coming into the reporting season, roughly 80% of the companies have thus far beaten profit estimates, according to data compiled by Bloomberg.
“We are about to enter the height of earnings season,” said Brad Bernstein, managing director at UBS Wealth Management. “As long as earnings continue to exceed expectations, the market can continue to move higher.”
For traders who closely follow Fibonacci analysis, the S&P 500 this month crossed above 4,505 to reach the 76.4% retracement of its peak-to-trough decline from its January 2022 high and its subsequent October low.
Since 1929, when the benchmark equities gauge suffered a bear market decline of at least 20% or more, this retracement level proved to be the start of a new uptrend, according to data compiled by Bloomberg Intelligence. So the index finishing above that level implies a bottom has definitely been set.
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro was little changed at $1.1053
- The British pound rose 0.6% to $1.2900
- The Japanese yen rose 0.4% to 140.88 per dollar
🍝 For the dinner table debate:
Latin America’s economies are expected to perform better than previously estimated by the International Monetary Fund (IMF) with the publication of its macroeconomic projections update this Tuesday. The lender improved its GDP projections for the region, from 1.6% to 1.9%; while for 2024 it maintained its projection at an expansion of 2.2%.
In its report, the IMF also revised upwards the projections for Brazil and Mexico, the two main economies of the region. Meanwhile, estimates for Argentina’s economy deteriorated sharply.
Regarding the rest of the world, the IMF estimates that the global economy could grow 3% this year, and another 3% in 2024; below the 3.5% of 2022 but above the forecast it had until recently (2.8%).
Paola Villar S, a content producer at Bloomberg Línea, and Rita Nazareth of Bloomberg News, contributed to this report
