A roundup of Wednesday’s stock market results from across the Americas
🌎 Argentina, Mexico lead LatAm losses:
The slump on the NYSE affected Latin America’s markets Wednesday, with the sharpest losses for Argentina’s Merval index (MERVAL), falling 1.72%, while the Mexican stock exchange (MEXBOL) slipped 1.71%.
The Merval was impacted by the drop in share prices for Transportadora de Gas del Norte S.A. (TGNO4), down 3.94%, Banco Supervielle (SUPV), which fell 3.89%, and Mirgor (MIRG), down 3,56%, while the Mexican shares with the sharpest declines were Industrias Peñoles SAB (PE&OLES*), down 5.37%; Grupo Televisa (TELVICPO), which slid 4.31%, and Regional SAB (RA), down 3.81%.
Chile’s IPSA index (IPSA) also closed lower, dragged down by the shares of Banco Santander (BSAN), which slipped 4.19%, Compañía Cervecerías Unidas (CCU), down 3.18%, and Empresas COPEC (COPEC), which ended the day 2.65% lower.
Colombia’s Colcap index (COLCAP) dropped 1.52% and Peru’s index (SPBLPGPT) 1.39%, while Brazil’s Ibovespa (IBOV) closed 0.32% lower.
🗽On Wall Street:
This year’s $6.5 trillion rally in stocks hit a wall, following hot labor-market data and a ramp-up in Treasury issuance just a day after a US credit downgrade by Fitch Ratings.
Equities fell across the board, with the S&P 500 notching its worst day since April. The tech-heavy Nasdaq 100 dropped 2% after a surge fueled by the artificial-intelligence frenzy. In late trading, Qualcomm Inc. slid on a tepid revenue forecast. Wall Street’s “fear gauge,” the VIX, climbed the most in almost five months. Treasury 10-year yields hit the highest since November, while the dollar rose.
To Dan Wantrobski at Janney Montgomery Scott, the stock market is seeing a “high-level consolidation” amid warnings about overbought conditions, bullish sentiment and generally thinner breadth readings. More volatility is in the cards over the next several months, with a number of potential catalysts such as Federal Reserve policy, rate volatility and tightening liquidity, he added.
“Wall Street can’t ignore what is happening with fixed income as Treasury yields surge,” said Ed Moya, senior market analyst for the Americas at Oanda. “Equity traders are using this surge in yields and some nervousness ahead of Apple and Amazon’s earnings as an opportunity to lock in some profits.”
A steeper yield curve
As bonds retreated, Wall Street had something else to worry about — a steeper yield curve — with rates on longer-term bonds rising faster than those on shorter-term maturities.
Whenever the US curve has steepened in a significant way from an inverted position over the past 50 years, it has been followed by a meaningful drop in the equity market, according to Matt Maley at Miller Tabak.
“With this in mind, we’re not worried about the downgrade impact,” Maley noted. “There are some developments to be concerned about, including the recent rise in Treasury yields. The steepening of the yield curve — from an inverted position — is bearish, not bullish for the stock market.”
The steepening of the yield curve extended a trend since the Bank of Japan surprised markets last week with a policy tweak. At 4.88%, two-year yields are 80 basis points higher than those on the 10-year note. That’s compared to a gap of 102 basis points two weeks ago.
After the closing bell:
- PayPal Holdings Inc. said a key measure of profits shrank in the second quarter as the company had to set aside more money to cover souring loans it has made to merchants.
- DoorDash Inc. reported a record number of delivery orders in the second quarter, showing consumers’ commitment to takeout despite rising prices.
- Shopify Inc. reported sales and profit for the second quarter that beat analyst expectations as the Canadian e-commerce giant attempts to turn around its business.
- Clorox Co. reported sales and profit that handily topped analysts’ projections after consumers absorbed higher prices for household goods such as cleaning products and Brita water filters.
- Zillow Group Inc. reported second-quarter earnings that beat analysts’ estimates, as the company’s core marketing business outperformed an anemic US housing market.
On the currency markets, the Bloomberg Dollar Spot Index rose 0.4%, the euro fell 0.4% to $1.0939, the British pound fell 0.5% to $1.2714 and the Japanese yen was little changed at 143.38 per dollar.
🍝 For the dinner table debate:
Inflation hit almost everyone in Latin America throughout 2022, and most people lost purchasing power: price increases in the economy generated real wage losses for many workers in the region, impacting the pockets of those who earned the least month after month.
In a challenging context, agreements between employers and workers to adjust the minimum wage were not left behind in 2023. However, not all countries have been able to implement them.
Paola Villar S, a content producer at Bloomberg Línea, and Rita Nazareth of Bloomberg News, contributed to this report
