NYSE Dow Jones finished today at:

[Skate]

S&P 500 sputters to another new 2022 low
U.S. stocks closed mixed on Tuesday, with the S&P 500 closing at a new 2022 low & the Dow Jones Industrial Average falling deeper into a bear market, a day after a tumultuous trading period. Tuesday’s moves in markets come as Wall Street increasingly anticipates the Federal Reserve’s rate-hiking campaign to fight inflation.

A wobbly day of trading on Wall Street
The markets ended with a mixed finish for U.S. stock indexes Tuesday as markets stagger amid worries about a possible recession. The volatile trading comes a day after a broad sell-off sent the Dow Jones Industrial Average into a bear market, joining other major U.S. indexes. The S&P 500 slipped -0.21%, its sixth consecutive loss The benchmark index had been up 1.7% in the early going before a mid-afternoon pullback. The Dow fell -0.43%, while the Nasdaq composite wound up with a +0.25% gain.

Major indexes remain in an extended slump
With just a few days left in September, stocks are heading for another losing month as markets fear that the higher interest rates being used to fight inflation could knock the economy into a recession. “The market right now is pricing in slower growth in the near term because of higher interest rates & inflation that’s been persistently hotter for longer than expected,” said Lindsey Bell, chief markets & money strategist at Ally Invest.

It was a mixed bag overnight
The S&P 500 fell 7.75 points to 3,647.29. The Dow dropped 125.82 points to 29,134.99. The Nasdaq rose 26.58 points to 10,829.50. The S&P 500 is down roughly 8% in September & has been in a bear market since June when it had fallen more than 20% below its all-time high set on the 4th of January. The Dow’s drop on Monday put it in the same company as the benchmark index & the tech-heavy Nasdaq.

Central banks around the world have been raising interest rates
The interest rate rise is in an effort to make borrowing more expensive & cool the hottest inflation in decades. The Federal Reserve has been particularly aggressive & raised its benchmark rate, which affects many consumer & business loans, again last week. It now sits at a range of 3% to 3.25%. It was at virtually zero at the start of the year. The Fed also released a forecast suggesting its benchmark rate could be 4.4% by the year’s end, a full percentage point higher than it envisioned in June.

Wall Street worries about a recession
Wall Street is worried that the Fed will hit the brakes too hard on an already slowing economy & veer it into a recession. The higher interest rates have been weighing on stocks, especially pricier technology companies, which tend to look less attractive to investors as rates rise. Losses in household goods makers, communications companies & utility stocks outweighed gains elsewhere in the market. Procter & Gamble fell 2.7%, Disney lost 2.3% & Edison International fell 2.9%. Energy stocks gained ground as U.S. oil prices rose 2.3%. Exxon Mobil rose 2.1%. Fears of a recession have grown as inflation remains stubbornly hot Investors will be watching the next round of corporate earnings very closely to get a better sense of how companies are dealing with inflation. Companies will begin reporting their latest quarterly results in early October.

Small company stocks held up better than the broader market
The Russell 2000 added 6.63 points, or 0.4%, to close at 1,662.51. Bond yields were mostly higher Tuesday. The yield on the 2-year Treasury, which tends to follow expectations for Federal Reserve action, fell to 4.31% from 4.34% late Monday. It is trading at its highest level since 2007. The yield on the 10-year Treasury, which influences mortgage rates, rose to 3.98% from 3.93%.

Investors are also closely watching the latest economic updates
Consumer confidence remains strong, despite higher prices on everything from food to clothing. The latest consumer confidence report for September from The Conference Board showed that confidence was even stronger than expected by economists. The government will release its weekly report on unemployment benefits on Thursday, along with an updated report on second-quarter gross domestic product. On Friday, the government will release another report on personal income & spending that will help provide more details on where & how inflation is hurting consumer spending.

ASX 200 expected to fall (Time Stamp 6:38 am)
The Australian share market looks set to give back yesterday’s gains today after a poor night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 42 points or 0.65% lower this morning.

Skate.

 

[Skate]

The Dow Jones at the close
Overnight the Dow Jones staggered amid worries about a possible recession with the fear that the higher interest rates being used to fight inflation could knock the economy into that recession.

The S&P 500 at the close
The S&P 500 slipped -0.21%, its sixth consecutive loss with the S&P 500 closing at a new 2022 low.

The Nasdaq at the close
The Nasdaq was the only bright spark of the day as the Nasdaq composite wound up eking out a +0.25% gain.

Skate.

 

[bigdog]

Thank you Skate

World shares sharply lower after wobbly day on Wall Street

TOKYO (AP) — World shares tumbled Wednesday after a wobbly day on Wall Street as markets churned over the prospect of a possible recession. U.S. futures and oil prices declined and China’s yuan weakened sharply.

apnews.com

Stocks rally, bonds soar in relief after UK calms markets​

By DAMIAN J. TROISE and STAN CHOE

Stocks rallied on Wall Street to their first gain in more than a week, as some calm returned to markets around the world Wednesday after the Bank of England moved forcefully to get a budding financial crisis there under control.

The S&P 500 jumped 2% for its best day in seven weeks to snap its longest losing streak since the coronavirus crash in February 2020. Besides the relief on Wall Street, bond markets around the world also relaxed and European stocks erased morning losses after the U.K. central bank said it would buy however many U.K. government bonds are needed to restore order to its financial markets.

The drop in bond yields eased some of the pressure that’s been choking Wall Street this year, and the Dow Jones Industrial Average rallied 1.9%. The Nasdaq composite climbed 2.1%, and the smaller stocks that make up the Russell 2000 index soared even more, 3.2%

The moves helped markets recover recent losses triggered by turmoil in U.K. financial markets. After the government there announced a sweeping set of tax cuts, investors worried the attempts to goose the U.K. economy could push already high inflation even higher. That caused the value of the British pound to plunge and bond yields globally to jump

Despite Wednesday’s rally, the U.S. stock market is still down more than 20% from its record set early this year and remains near its lowest point since late 2020. Analysts say more turbulence is likely ahead as worries about a possible recession, higher interest rates and even higher inflation continue to hang over Wall Street.

Underscoring those concerns, the yield on the 10-year U.S. Treasury briefly topped 4% Wednesday morning to touch its highest level in more than a decade. It’s been on a swift surge along with other Treasury yields as the Federal Reserve jacks up short-term interest rates at the fastest pace in decades.

By raising rates, the Fed is hoping to slow the economy enough to force down the high inflation that’s hammering the economy. But it risks creating a recession if it takes rates too high too quickly. Already, the housing industry has been hurt in particular as mortgage rates have jumped to their highest levels since 2008

A recession appears to be inevitable, according to Liz Ann Sonders, chief investment strategist at Charles Schwab. She points to several discouraging signals, including six straight months of contraction for an index of leading economic indicators. That hasn’t happened since the beginning of the global financial crisis two recessions ago.

Investment giant Vanguard puts the chance of a U.S. recession at 25% this year and at 65% next year on expectations for the Fed to keep hiking rates and to likely hold them at high levels through 2023.

Besides the worries about higher rates from the Fed and other central banks, a litany of other pressures on the market are also lurking.

Among them: Investors are worried that the stress caused by a huge run for the U.S. dollar’s value against other currencies could make something crack somewhere in global markets. In Europe, tensions are rising even further amid Russia’s invasion of Ukraine, with suspicions about sabotage to important natural gas pipelines the latest flashpoint. And profits for U.S. companies are under threat because of the slowing economy, high inflation and rising dollar

For Wednesday at least, though, the market seemed to be focused more on relief than such worries.

“Investors got a sense that maybe central banks blinked, or at least the central bank of England blinked. That has led to lower rates” for longer-term U.S. bonds, said Jack Ablin, chief investment officer at Cresset. “And that has helped push stocks higher.”

Following the Bank of England’s bond-buying announcement, the yield on the 10-year U.S. Treasury sank sharply to 3.73% from 3.95% late Tuesday. In the U.K., the 10-year yield tumbled by roughly half a percentage point to a shade above 4%

On Wall Street, a widespread rally saw nearly 35 stocks rise in the S&P 500 index for every one that fell. Health care stocks helped lead the way following an encouraging update on a potential treatment for Alzheimer’s disease

Japan’s Eisai said its potential treatment appeared to slow the fatal disease in a late-stage study. Shares of Biogen, which will co-promote the drug, soared 39.9%.

Stocks of energy producers were also strong after crude oil prices recovered some of their steep recent losses caused by recession worries.

The S&P 500 rose 71.75 points to close at 3,719.04. The Dow gained 548.75 to 29,683.74, and the Nasdaq climbed 222.13 to 11,051.64.

Wall Street’s rise came despite a 1.3% drop for Apple, which is the most influential stock in the S&P 500 because it’s the largest. It was hurt by a report from Bloomberg that said soft demand for the latest iPhone model is pushing Apple to back off plans to increase production.

Earlier in the morning, before the Bank of England’s announcement, stocks across Asia fell. Hong Kong’s Hang Seng lost 3.4%, South Korea’s Kospi fell 2.5% and Japan’s Nikkei 225 dropped 1.5%. China’s yuan also fell to a 14-year low against the dollar despite central bank efforts to stem the slide

ASX 200 Futures

The S&P 500 rose 71.75 points to close at 3,719.04. The Dow gained 548.75 to 29,683.74, and the Nasdaq climbed 222.13 to 11,051.64.

The S&P 500 jumped 2% for its best day in seven weeks to snap its longest losing streak since the coronavirus crash in February 2020.

 

[bigdog]

 

[bigdog]

Asian stocks sink on German inflation, British tax cuts

Asian stocks have sunk again after German inflation spiked higher, British Prime Minister Liz Truss defended a tax-cut plan that rattled investors and Chinese manufacturing weakened.

apnews.com

Wall Street drops back to lowest since 2020 as fear returns​

By DAMIAN J. TROISE, STAN CHOE and ALEX VEIGA

Stocks fell broadly on Wall Street Thursday as worries about a possible recession and rising bond yields put the squeeze back on markets.

The S&P 500 fell 2.1%, reaching its lowest level since late 2020. The washout erased the index’s gains in a big rally the day before. That’s when forceful moves by the Bank of England to get suddenly spiking U.K. yields under control led to a global burst of relief among investors.

The Dow Jones Industrial Average fell 1.5% and the Nasdaq composite lost 2.8%. The Russell 2000 index of smaller companies dropped 2.4%.

The major indexes are on pace for a weekly loss to wind up what has been a dismal month for Wall Street. With one day left in September, the benchmark S&P 500 is down about 8% for the month.

For markets to really turn higher, after U.S. stocks have lost more than 20% of their value this year, analysts say investors will need to see a break from the high inflation that’s swept the world.

That hasn’t happened yet, with even more data arriving Thursday showing the opposite. And that means the Federal Reserve and other central banks will likely keep pushing interest rates higher to slow their economies in hopes of pushing down inflation. By doing that, they’re also risking recessions if they go too far.

“The economy doesn’t look to be softening if you look at employment data,” said Brad McMillan, chief investment officer for Commonwealth Financial Network. That undercuts any investor hopes a weakening economy could convince the Fed to take it easier on interest rates.

The selling was widespread Thursday, with more than 90% of stocks in the S&P 500 finishing in the red. The index fell 78.57 points to 3,640.47.

The Dow lost 458.13 points to close at 29,225.61, and the Nasdaq slid 314.13 points to 10,737.51. The Russell 2000 finished down 40.31 points at 1,674.93.

Stocks fell as Treasury yields climbed and raised the pressure on markets. The yield on the 10-year Treasury rose to 3.77% from 3.73% late Wednesday. It had been above 3.85% in morning trading.

The yield on the two-year Treasury, which more closely tracks expectations for Fed moves, rose more aggressively to 4.20% from 4.14%.

A stronger-than-expected report on the U.S. jobs market bolstered expectations for the Fed to keep raising rates and hold them at high levels for a while, potentially through 2023

Fewer workers filed for unemployment benefits last week than economists expected. That’s good news for workers in general and an indication layoffs aren’t widespread despite worries about the economy. But it also keeps upward pressure on inflation, which gives the Fed more reason to keep rates high.

The central bank’s benchmark overnight interest rate has already zoomed to a range of 3% to 3.25%, up from basically zero as recently as March. That’s its highest level since 2008, and the wide expectations is for the Fed to hike it by at least another full percentage point by early 2023.

Rate increases have a notoriously long lag time before they hit the broad economy. But they’re already causing big pain for the housing industry, where the average rate on a 30-year fixed mortgage has more than doubled over the last 12 months to 6.70%

Higher interest rates not only invite the possibility of a recession, they also push down on prices for stocks and other investments regardless of what the economy’s doing. Investments seen as the most expensive or the riskiest tend to take the hardest hits.

Economic reports elsewhere around the world also firmed expectations for higher rates coming in the future. In Germany, for example, a reading on inflation came in hotter than expected.

In the U.K., meanwhile, Prime Minister Liz Truss defended her plan to cut taxes even though critics said it would worsen inflation. The plan had sent U.K. bond yields spiking, forcing the Bank of England on Wednesday to pledge to buy however many U.K. government bonds are needed to lower yields. The bond-buying announcement came just before the central bank had planned to do the opposite and sell some of the bonds it had purchased earlier to support the economy

Even beyond the worries about central banks and rates, many other concerns continue to hang over markets.

A supercharged U.S. dollar has climbed so much so quickly against other currencies that investors worry something could break somewhere in global markets. Europe’s already struggling economy looks to be facing more pressure from high energy prices amid accusations that someone deliberately damaged pipelines delivering gas from Russia to Germany. And in the U.S., investors are concerned that one of the main levers setting stock prices may be under threat as corporate profits bend under higher interest rates, a slowing economy and high inflation.

CarMax, the auto seller, plunged 24.6% for the largest loss in the S&P 500 after it reported weaker profit than expected for the three months through August. It said the used auto market is tough generally, as higher interest rates make getting auto loans more expensive

The selling was widespread Thursday, with more than 90% of stocks in the S&P 500 finishing in the red. The index fell 78.57 points to 3,640.47.

The Dow lost 458.13 points to close at 29,225.61, and the Nasdaq slid 314.13 points to 10,737.51. The Russell 2000 finished down 40.31 points at 1,674.93

 

[bigdog]

Stocks end September down 9.3%, worst month since March 2020

Wall Street closed out a miserable September with a loss of 9.3%, the worst monthly decline since March 2020.

apnews.com

Stocks end September down 9.3%, worst month since March 2020​

By STAN CHOE and ALEX VEIGA

Wall Street closed out a miserable September on Friday with the S&P 500′s worst monthly skid since March 2020, when the coronavirus pandemic crashed global markets.

The benchmark index ended the month with a 9.3% loss and posted its third straight losing quarter. It’s now at its lowest level since November 2020 and is down by more than a quarter since the start of the year.

The main reason financial markets continue to struggle is fear about a possible recession, as interest rates soar in hopes of beating down the high inflation that’s swept the world.

“Quite frankly, if it’s a deep recession you’re going to have to see more of a sell-off,” said Quincy Krosby, chief equity strategist for LPL Financial. “This is what the market is trying to navigate now.”

The Federal Reserve has been at the forefront of the global campaign to slow economic growth and hurt job markets just enough to undercut inflation but not so much that it causes a recession. On Friday, the Fed’s preferred measure of inflation showed it was worse last month than economists expected. That should keep the Fed on track to keep hiking rates and hold them at high levels a while, raising the risk of it going too far and causing a downturn

Vice Chair Lael Brainard was the latest Fed official on Friday to insist it won’t pull back on rates prematurely.
“At this point, it’s not a matter of if we’ll have a recession, but what type of recession it will be,” said Sean Sun, portfolio manager at Thornburg Investment Management.

All told, the S&P 500 fell 54.85 points, or 1.5%, to close at 3,585.62 Friday, after flipping between small losses and gains in the early going. It has now posted a weekly loss in six out of the last seven weeks.

The Dow Jones Industrial Average dropped 500.10 points, or 1.7%, to 28,725.51. The Nasdaq composite slid 161.89 points, or 1.5%, to 10,575.62. The tech-heavy index sank 10.5% in September and is down 32.4% so far this year.

Smaller company stocks also had a rough September. The Russell 2000 ended the month down 9.7%. On Friday, it lost 10.21 points, or 0.6%, to 1,664.72.

Higher interest rates knock down one of the main levers that set prices for stocks. The other lever also looks to be under threat as the slowing economy, high interest rates and other factors weigh on corporate profits

Cruise ship operator Carnival dropped 23.3% for the biggest decline among S&P 500 stocks after it reported a bigger loss for its latest quarter than analysts expected and revenue that fell short of expectations. Rivals Norwegian Cruise Line and Royal Caribbean Group slid 18% and 13.2%, respectively.

Nike slumped 12.8%, its worst day in more than 20 years, after it said its profitability weakened during the summer because of discounts needed to clear suddenly overstuffed warehouses. The amount of shoes and gear in Nike’s inventories swelled by 44% from a year earlier.

This year’s powerful surge for the U.S. dollar against other currencies also hurt Nike. Its worldwide revenue rose only 4%, instead of the 10% it would have if currency values had remained the same

Nike isn’t the only company to see its inventories balloon. So have several big-name retailers, and such bad news for businesses could actually mean some relief for shoppers if it leads to more discounts. It echoed some glimmers of encouragement buried within Friday’s report on the Fed’s preferred gauge of inflation. That showed some slowing of inflation for goods, even as price gains kept accelerating for services.

Another report on Friday also offered a glimmer of hope. A measure of consumer sentiment showed U.S. expectations for future inflation came down in September. That’s crucial for the Fed because tightly held expectations for higher inflation can create a debilitating, self-reinforcing cycle that worsens it.

Treasury yields initially eased a bit on Friday, letting off some of the pressure that’s built on markets, but then turned higher by late afternoon.

The yield on the 10-year Treasury rose to 3.81% from 3.79% late Thursday. The two-year yield, which more closely tracks expectations for Fed action, rose to 4.23% from 4.19%

Not all stocks took a beating in September. Biogen soared 35%, but it was an outlier. FedEx was among the market’s biggest losers, ending the month 29.6% lower.

Looking at the third quarter, which included a market rally in July, Netflix was among the best performers, climbing 34.6%. It’s still down 60.9% for the year.

A long list of other worries continues to hang over global markets, including increasing tensions between much of Europe and Russia following the invasion of Ukraine. A controversial plan to cut taxes by the U.K. government also sent bond markets spinning recently on fears it could make inflation even worse. Bond markets calmed a bit only after the Bank of England pledged mid-week to buy however many U.K. government bonds are needed to bring yields back down.

The stunning and swift rise of the U.S. dollar against other currencies, meanwhile, raises the risk of creating so much stress that something cracks somewhere in global markets

Stocks around the world were mixed after a report showed that inflation in the 19 countries that use Europe’s euro currency spiked to a record and data from China said that factory activity weakened there

 

[bigdog]

the S&P 500 fell 54.85 points, or 1.5%, to close at 3,585.62 Friday, after flipping between small losses and gains in the early going. It has now posted a weekly loss in six out of the last seven weeks.


The Dow Jones Industrial Average dropped 500.10 points, or 1.7%, to 28,725.51. The Nasdaq composite slid 161.89 points, or 1.5%, to 10,575.62. The tech-heavy index sank 10.5% in September and is down 32.4% so far this year.

 

[CityIndex]

It could be really interesting to see how US markets, and by extension, global indices, trade over the coming weeks.

The S&P500 finally closed below the June low on Friday with the higher volume on the day. This could open the door to a strong downside break as the fundamental backdrop remains bearish. However, after 3 straight quarters of losses and the worse month since March 2020, selling pressure is at an extreme, and any positive news for equities could fuel a bounce.

All trading carries risk, but things may be set up for a big move in either direction this month.

 

[bigdog]

Asian shares rise after 'relief rally' on Wall Street

Asian shares are higher, encouraged by a rally in U.S. shares after some weak economic data raised hopes that the Federal Reserve might ease away from aggressive interest rate hikes.

apnews.com

Wall Street soars to best day since summer, S&P 500 up 2.6%​

By DAMIAN J. TROISE and STAN CHOE

Stocks on Wall Street rallied to their best day in months on Monday after falling bond yields eased some of the pressure that’s been battering markets.

The S&P 500′s leap of 2.6% was its biggest since July, the latest swing for a scattershot market that’s been mostly falling this year on worries about a possible global recession. Wall Street’s main measure of health was coming off its worst month since the coronavirus crashed markets in early 2020 and is still down nearly 23% for the year.

The Dow Jones Industrial Average jumped 2.7%, and the Nasdaq composite gained 2.3% in Monday’s widespread rally that swept the vast majority of U.S. stocks higher.

Giving some respite was a drop in Treasury yields, which have been surging at market-shaking speed for most of the year. The yield on the 10-year Treasury, which helps set rates for mortgages and many other kinds of loans, fell to 3.64% from 3.83% late Friday. It got as high as 4% last week after starting the year at just 1.51%

Helping to drive markets was a report on U.S. manufacturing that came in weaker than expected, along with data showing a drop off in construction sending. While that may seem discouraging for the economy, it could mean the Federal Reserve won’t have to be so aggressive about raising interest rates in order to beat down the high inflation damaging households’ finances

By raising rates, the Fed is making it more expensive to buy a house, a car or most anything else purchased on credit. The hope is to slow the economy just enough to starve inflation of the purchases needed to keep prices rising so quickly. But the Fed also risks causing a recession if it goes too far.

The Fed has already pulled its key overnight interest rate to a range of 3% to 3.25%, up from virtually zero as recently as March. Most traders expect it to be more than a full percentage point higher by early next year.

The yield on the two-year Treasury, which more closely tracks expectations for Fed action, fell to 4.11% from 4.27% following the weaker-than-expected reports on the economy.

Besides stocks, lower rates also boost prices for everything from cryptocurrencies to gold, which can suddenly look a bit more attractive when bonds are paying less in income

Stocks of high-growth companies and particularly risky or expensive investments have been the most affected by changes in rates. Bitcoin rallied Monday with the reprieve in yields, while technology stocks did the heaviest lifting to carry the S&P 500. Apple and Microsoft both rose more than 3%.

Altogether, the S&P 500 climbed 92.81 points to close at 3,678.43. The Dow gained 765.38 to 29,490.89, and the Nasdaq rose 239.82 to 10,815.43.

Still, cross currents continue to course through markets, and analysts largely expect sharp swings in prices to continue.

Crude oil prices jumped Monday amid speculation big oil-producing countries could soon announce cuts to production. That adds upward pressure on inflation.

It also lifted shares of energy-producing companies to big gains. Exxon Mobil leaped 5.3%, and Chevron climbed 5.6%.

Monday’s rally came despite an 8.6% drop for Tesla, one of the most influential stocks on Wall Street because of its massive market value. The maker of electric vehicles delivered fewer vehicles from July through September than investors expected.

More turbulence for markets could arrive Friday, when the latest update on the U.S. jobs market hits. Along with its reports on inflation, the U.S. government’s jobs report has been one of the most highly anticipated pieces of data on Wall Street each month.

It will be the last jobs report before the Fed makes its next decision on interest rates, scheduled for Nov. 2, and continued strength would give the central bank more leeway to keep hiking. Traders say the likeliest move is a fourth straight increase of a whopping three-quarters of a percentage point, triple the usual move.

For markets to make a meaningful move higher, many investors say they need to see a break in inflation that gets the Fed to ease off its aggressive path

Such hopes for a Fed “pivot” by investors have repeatedly resurfaced this year, only to get shot down by further accelerations in inflation.

But with stresses building in financial markets as central banks around the world hike rates in concert, conditions have gotten “into the danger zone where ‘bad stuff’ happens,” according to Michael Wilson, equity strategist at Morgan Stanley.

That could get the Fed to blink at some point. The problem, Wilson says, is that another force weighing on markets could soon come to the forefront: weaker corporate profits.

A suite of challenges from higher interest rates to the surging value of the U.S. dollar may be setting things up for “the freight train of the oncoming earnings recession,” he wrote in a report. Companies are getting ready now to report in upcoming weeks how much they earned during the summer, and analysts have been downgrading their expectations

The S&P 500′s leap of 2.6% was its biggest since July, the latest swing for a scattershot market that’s been mostly falling this year on worries about a possible global recession. Wall Street’s main measure of health was coming off its worst month since the coronavirus crashed markets in early 2020 and is still down nearly 23% for the year.

The Dow Jones Industrial Average jumped 2.7%, and the Nasdaq composite gained 2.3% in Monday’s widespread rally that swept the vast majority of U.S. stocks higher.

 

[bigdog]

Hong Kong shares soar 5%, leading Asian market gains

Hong Kong's share benchmark has soared more than 5% as Asian shares track gains on Wall Street. New Zealand’s central bank on Wednesday hiked its benchmark interest rate to 3.5%, saying inflation remained too high and labor scarce.

apnews.com

Stocks rise in extended rally, clawing back more ground​

By DAMIAN J. TROISE and ALEX VEIGA

The Dow Jones Industrial Average climbed more than 800 points and the S&P 500 had its best day in more than two years Tuesday as the market clawed back more of the ground it lost in a miserable several weeks on Wall Street.

The S&P 500 rose 3.1%, its best day since May 2020, as all but five of the stocks in the index notched gains. The benchmark index has been rallying since hitting its lowest point of the year on Friday to close out a September slump.

Twitter surged 22.2% after Elon Musk said he would go ahead with his $44 billion acquisition of the social media company, abandoning months of efforts to get out of the deal.

The Dow rose 2.8% and the Nasdaq composite climbed 3.3%. Small company stocks also made solid gains, lifting the Russell 2000 3.9% higher. European and Asian markets also rose broadly.

The market’s gains come as major indexes remain in a bear market after falling 20% or more from their most recent record highs. The two-day rally is hitting markets as investors look for signs that central banks might ease up on their aggressive rate hikes aimed at taming the hottest inflation in four decades

Australia’s central bank made an interest rate hike that was smaller than previous ones and that helped Australia’s market jump 3.8%. It is a potentially positive signal for investors, along with the latest jobs data from the U.S.

Investors in the U.S. received potentially encouraging news from a government report on job openings that showed the number of available jobs in the U.S. plummeted in August compared with July. It’s a sign that businesses may pull back further on hiring and potentially cool chronically high inflation.

The optimism could be misguided as inflation remains stubbornly hot, said John Lynch, chief investment officer for Comerica Wealth Management.

“Investors should be worried about false positives,” he said. “Be wary of the history of bear market rallies, they can be very seductive.”

Major indexes could be in store for more declines ahead, he said, as more economic data and the next round of earnings reports paints a clearer picture of how inflation continues to impact business operations and consumer spending.

The S&P 500 rose 112.50 points to 3,790.93, while the Dow gained 825.43 points to close at 30,316.32. The Nasdaq rose 360.97 points to 11,176.41 and the Russell 2000 added 66.90 points at 1,775.77

Treasury yields continued to pull back from their multiyear highs, which has helped relieve some of the pressure on stocks. The yield on the 10-year Treasury, which helps set rates for mortgages and many other kinds of loans, slipped to 3.64% from 3.65% late Monday. It got as high as 4% last week after starting the year at just 1.51%.

The yield on the two-year Treasury, which more closely tracks expectations for Federal Reserve action, fell to 4.10% from 4.12% late Monday.

The market was mostly quiet with company news ahead of the next round of corporate earnings.

Cruise line operators were among the biggest gainers in the S&P 500. Norwegian Cruise Line jumped 16.8%, Royal Caribbean surged 16.7% and Carnival gained 13.3%

Investors are watching closely as central banks raise interest rates to make borrowing more difficult and slow economic growth to try to tame inflation. Investors are hoping that they will eventually ease off their aggressive rate hikes and the move by Australia’s central bank is a hopeful sign for some.

Wall Street is worried that the rate hikes, especially the increases from the Fed, could go too far in slowing growth and send economies into a recession. The Fed has already pushed its key overnight interest rate to a range of 3% to 3.25%, up from virtually zero as recently as March.

Economic growth is already slowing globally and the U.S. economy contracted during the first two quarters of the year, which is considered an informal signal of a recession. The economy still has several strong pockets, including employment.

Wall Street will get a more detailed look at the employment situation in the U.S. this week, with a report on hiring by private companies due out Wednesday, the latest tally of weekly applications for unemployment benefits on Thursday and the government’s monthly jobs report for September on Friday.

If those reports point to a still strong job market, that could trigger a bond market sell-off, which would weigh on stocks, said Jay Hatfield, CEO of Infrastructure Capital Advisors.

“All those could hit the stock market because right now the bond market is really driving the stock market,” he said

ASX 200 Futures Overview​

The Dow Jones Industrial Average climbed more than 800 points and the S&P 500 had its best day in more than two years Tuesday as the market clawed back more of the ground it lost in a miserable several weeks on Wall Street.

The S&P 500 rose 112.50 points to 3,790.93, while the Dow gained 825.43 points to close at 30,316.32. The Nasdaq rose 360.97 points to 11,176.41 and the Russell 2000 added 66.90 points at 1,775.77

​

 

[bigdog]

Asian stocks mixed on strong US hiring, OPEC oil output cuts

Asian stocks are mixed after strong U.S. hiring dampened hopes the Federal Reserve might ease off plans for interest rate hikes and the OPEC oil production cartel agreed to shore up prices by cutting output.

apnews.com

Wall Street’s rally runs out of gas, leaving indexes lower​

By DAMIAN J. TROISE and ALEX VEIGA

A wobbly day of trading on Wall Street ended with stocks slightly lower Wednesday as a gangbuster two-day rally ran out of gas.

Stock indexes had been in the red much of the day before briefly shifting into the green following a late-afternoon burst of buying. The S&P 500 ended 0.2% lower after having veered between a low of 1.8% and a high of 0.4%. The benchmark index was coming off its best two-day rally since the spring of 2020.

The Dow Jones Industrial Average slipped 0.1% and the Nasdaq composite fell 0.2%. The Russell 2000 index of small company stock closed 0.7% lower.

Bond yields rose broadly. Oil prices also rose after the OPEC+ cartel ordered production cuts.

The broader market is still bruised from its stumble in September, but investors have been hoping that signs of a softening economy may convince central banks to temper their aggressive interest rate hikes. Analysts have said such hopes may be premature.

“I’m not surprised with short-term traders looking to take profits now and then decide later whether this is the beginning of a lasting bear market bounce or even the beginning of a new bull market,” said Sam Stovall, chief investment strategist at CFRA.

The S&P 500 dropped 7.65 points to 3,783.28. The Dow slipped 42.45 points to close at 30,273.87. The Nasdaq slid 27.77 points to 11,148.64. The Russell 2000 fell 13.07 points to 1,762.69

Financial companies and utilities were among the sectors that weighed down the market. JPMorgan Chase fell 1.3% and Duke Energy dropped 3.2%.

Technology companies and health care stocks rose. Qualcomm gained 2.1% and Illumina climbed 6.6%.

Energy stocks gained ground as U.S. crude oil prices rose 1.4%. Exxon Mobil rose 4%.

Treasury yields rose and applied more pressure to stocks after several days of relief. Higher yields mean higher borrowing costs for companies, and they also make bonds more appealing to investors versus stocks.

The yield on the 10-year Treasury, which helps set rates for mortgages and many other kinds of loans, jumped to 3.75% from 3.61% late Tuesday.

The yield on the two-year Treasury, which more closely tracks expectations for Federal Reserve action, rose to 4.13% from 4.10% late Monday.

Wall Street is preparing for the next round of corporate earnings reports to get a better sense of how hard the hottest inflation in four decades is squeezing businesses and consumers

Higher energy prices, particularly for gasoline, were a big reason for inflation’s surge earlier in the year. Stubbornly hot inflation, despite energy costs easing over the last few months, remains a big focus for investors. The Fed and other central banks have been raising interest rates to make borrowing more difficult and slow economic growth, but Wall Street is concerned that the potential solution for high inflation could result in a recession.

Investors are looking for signs that the economy is slowing enough to allow central banks a reason to ease up on rate hikes. Some signs this week included a tamer rate hike by Australia’s central bank and a U.S. report showing that the number of available jobs plummeted in August

“We’ve heard about companies that while they’re not laying people off they are reducing the number of jobs available,” Stovall said. “So, the higher rates and higher inflation certainly are having their effect on hiring.”

Employment has been a particularly strong area of the economy and any signs that the hot job market is cooling could mean that inflation might follow. Analysts have said such hopes may be premature. A report on U.S. job growth at private employers came in stronger than expected Wednesday, as did a report on the services sector.

Wall Street will get a more detailed look at employment in the U.S. on Friday with the government’s monthly jobs report for September.

Stocks are “in the midst of a tug of war between reality and expectations,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.

The reality is that inflation remains hot while markets expect it has peaked and that the Fed will ease up on rate increases, he said. Trading will likely remain volatile because of that dynamic and other uncertainties hanging over the market

“We need time for the pace of inflation to show it’s under control,” he said.

The Fed has said it is determined to continue raising interest rates until it is satisfied that inflation is under control. That resolve has been echoed by some central banks globally.

New Zealand’s central bank raised its benchmark interest rate to 3.5%, saying inflation remained too high, most recently at 7.3%, and labor scarce. The half-point rate increase was the fifth in a row by the Reserve Bank of New Zealand since February.

The S&P 500 dropped 7.65 points to 3,783.28. The Dow slipped 42.45 points to close at 30,273.87. The Nasdaq slid 27.77 points to 11,148.64. The Russell 2000 fell 13.07 points to 1,762.69

 

[bigdog]

Asian stock markets fall ahead of US employment update

Asian shares have followed Wall Street lower ahead of U.S. jobs data that investors hope will persuade the Federal Reserve to ease off plans for more interest rate hikes.

apnews.com

Stocks close lower again on Wall Street, still up for week​

By DAMIAN J. TROISE and ALEX VEIGA

A choppy day of trading ended with stocks broadly lower on Wall Street Thursday, though indexes have managed to hold onto most of their sizeable gains from a big rally at the start of the week.

The S&P 500 fell 1% after having been up 0.4% in the early going. The benchmark index is up 4.4% for the week following its best two-day rally since the spring of 2020.

The selling was widespread, with roughly 80% of the stocks in the S&P 500 ending in the red. The Dow Jones Industrial Average fell 1.1%, while the Nasdaq composite lost 0.7%. The Russell 2000 index of smaller company stocks closed 0.6% lower.

Treasury yields gained ground and put more pressure on stocks. The yield on the 10-year Treasury, which helps set rates for mortgages and many other kinds of loans, rose to 3.81% from 3.75% late Wednesday. The yield on the two-year Treasury, which more closely tracks expectations for Federal Reserve action, rose to 4.22% from 4.14% late Monday

Investors were reviewing the latest data on jobs, which showed more Americans filed for unemployment benefits last week. Traders will be watching closely on Friday when the government releases its monthly job market data.

The labor market remains strong in the face of persistent inflation and a slowing overall U.S. economy. That’s good for job hunters, but could give the Federal Reserve more reason to keep raising interest rates in its bid to crush inflation. Wall Street is eager for definitive signs that inflation is on the wane and the central bank can finally ease back on its rate hikes

“We still have very, very hot inflation, and there’s nothing slowing the Fed anytime soon,” said Paul Kim, CEO of Simplify ETFs. “And the market’s just waiting for clarity. And that’s why you’re seeing a little bit of choppiness, but no real clear direction.”

The S&P 500 fell 38.76 points to 3,744.52. The Dow dropped 346.93 points to close at 29,926.94. The Nasdaq slid 75.33 points at 11,073.31. The Russell 2000 fell 10.18 points to 1,752.51.

Technology, financial and health care stocks were among the biggest weights on the market. Intel dropped 1.7%, Citigroup fell 1.8% and Johnson & Johnson fell 1.9%.

Energy stocks mostly rose as the price of U.S. crude oil increased 0.8%. Marathon Oil gained 3.9%

Shares in cannabis companies surged following a late-afternoon announcement by the White House that President Biden is pardoning thousands of Americans convicted of “simple possession” of marijuana under federal law.

Biden also directed the secretary of Health and Human Services and the U.S. attorney general to review how marijuana is scheduled under federal law. It is currently classified as a Schedule I drug, alongside heroin and LSD. Rescheduling the drug would reduce or potentially eliminate criminal penalties for possession.

Tilray Brands, MedMen Enterprises, Curaleaf and Trulieve Cannabis were among the cannabis stocks that jumped at least 30%. These and most other cannabis stocks remain deeply in the red for the year, however.

Wall Street is watching employment data very closely as the Fed remains determined to raise interest rates to try and tame the hottest inflation in four decades. Investors are concerned that the Fed could go too far with its rate increases and push the economy into a recession

New U.S. government data showed that more Americans filed for unemployment benefits last week, the largest number in four months.

The job market has been a particularly strong area of an otherwise slowing economy. Any sign that it’s weakening could factor into the the Fed’s future decisions to either remain aggressive or ease up. Government employment data released on Tuesday indicated that the job market may be cooling. A more closely watched monthly employment report, for September, will be released on Friday.

Wall Street analysts expect the government to report that the U.S. economy added 250,000 jobs last month, well below the average of 487,000 a month over the past year, but still a strong number that suggests the labor market is healthy despite chronic inflation and two straight quarters of U.S. economic contraction

More broadly, the global economy has also been hit hard by record inflation and lingering uncertainty over Russia’s invasion of Ukraine. That conflict continues to hang over energy costs worldwide, but especially for Europe. The International Monetary Fund is once again lowering its projections for global economic growth in 2023 and said the risks of a recession are rising.

Investors will soon get more information on just how hard inflation is squeezing businesses and consumers when companies start reporting their third-quarter financial results this month. More importantly, Wall Street will be listening closely to what executives say about expectations for the remainder of the year and into 2023

The S&P 500 fell 1% after having been up 0.4% in the early going. The benchmark index is up 4.4% for the week following its best two-day rally since the spring of 2020.

The selling was widespread, with roughly 80% of the stocks in the S&P 500 ending in the red. The Dow Jones Industrial Average fell 1.1%, while the Nasdaq composite lost 0.7%. The Russell 2000 index of smaller company stocks closed 0.6% lower.

 

[CityIndex]

Not too surprising to see the S&P500 find some selling pressure this week around the long-term support-turned-resistance of 3800. Tonight's NFP report will likely be key in whether the index faces a stronger rejection from this level, or if it can break higher over the near-term.

All trading carries risk, and although we should see further signs of the US labour market cooling, the print will most likely need to be below current market expectations of 265K new jobs in order to boost bets on the Fed slowing the pace of their rate hikes.

 

[bigdog]

A SEA OF RED TODAY

Stocks lose more ground on fears a recession may be looming

Wall Street lost more ground on worries that a still-strong U.S jobs market may actually make a recession more likely.

apnews.com

Stocks lose more ground on fears a recession may be looming​

By STAN CHOE and ALEX VEIGA

Good news on the economy remains bad news for Wall Street, as stocks fell sharply Friday on worries a still-strong U.S jobs market may actually make a recession more likely.

The S&P 500 ended 2.8% lower after briefly dropping 3.3% as traders weighed a government report showing employers hired more workers last month than economists expected. The Dow Jones Industrial Average fell 2.1% and the Nasdaq composite lost 3.8%.

Wall Street is worried the Federal Reserve could see that as proof the economy has yet to slow enough to get inflation under control. That could clear the way for the Fed to continue hiking interest rates aggressively, something that risks causing a recession if done too severely.

“The employment situation is still good and that might be a little frustrating to the Fed,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments. “The Fed thinks we need more people unemployed in order to make sure inflation comes down and stays down.”

Stocks have tumbled over 20% from records this year on worries about inflation, interest rates and the possibility of a recession.

The major indexes managed to notch a gain for the week, thanks to a powerful but short-lived rally Monday and Tuesday after some investors squinted hard enough at some weaker-than-expected economic data to suggest the Fed may take it easier on rate hikes. But Friday’s jobs report may have dashed such hopes for a “pivot” by the Fed. It’s a pattern that has been repeated several times this year

“For for a lot of this a year, there really has been a degree of false optimism among many investors that the Fed would would tap the brakes and pivot sooner than they’ve been telling us they will for quite some time,” Bill Merz, head of capital market research at U.S. Bank Wealth Management.

“The market is increasingly coming to terms with, albeit gradually, that the Fed is highly unlikely to pivot in the near-term as some have been hoping for.”

Employers added 263,000 jobs last month. That’s a slowdown from the hiring pace of 315,000 in July, but it’s still more than the 250,000 that economists expected.

Also discouraging for investors was that the unemployment rate improved partly for the wrong reasons. Among people who aren’t working, fewer than usual are actively looking for jobs. That’s a continuation of a longstanding trend that could keep upward pressure on wages and inflation.

“We are not out of the woods yet, but should be getting closer as the impact of aggressive policy starts to take hold,” said Matt Peron, director of research at Janus Henderson Investors.

By hiking interest rates, the Fed is hoping to slow the economy and jobs market. The plan is to starve inflation of the purchases needed to keep prices rising even further. The Fed has already seen some effects, with higher mortgage rates hurting the housing industry in particular. The risk is that if the Fed goes too far, it could squeeze the economy into a recession. In the meantime, higher rates push down on prices for stocks, cryptocurrencies and other investments.

“Everything hinges on inflation at this point,” said Peter Essele, head of portfolio management for Commonwealth Financial Network. “We do think its going to moderate over the next few quarters.”

Altogether, many investors see Friday’s jobs data keeping the Fed on track to hike its overnight rate by three-quarters of a percentage point next month. It would be the fourth such increase, which is triple the usual amount, and bring the rate up to a range of 3.75% to 4%. It started the year at virtually zero.

Crude oil, meanwhile, continued its sharp climb and is heading for its biggest weekly gain since March. Benchmark U.S. crude jumped 4.7% to settle at $92.64 per barrel. Brent crude, the international standard, rose 3.7% to settle at $97.92.

They’ve shot higher because big oil-producing countries have pledged to cut production in order to keep prices up. That should keep the pressure up on inflation, which is still near a four-decade high but hopefully moderating.

The rise for crude helped stocks of oil-related companies to be among Wall Street’s very few to rise Friday. Oilfield services provider Halliburton climbed 2%.

Stocks of technology companies led the way in the opposite direction. They’ve been among the hardest hit by this year’s rising rates, which most hurt investments seen as the riskiest, most expensive or having to make investors wait the longest for big growth.

Microsoft slumped 5.1%, and Amazon fell 4.8%.

All told, more than 90% of stocks in the S&P 500 closed lower Friday. The index fell 104.86 points to 3,639.66. It ended with a 1.5% gain for the week, its first weekly gain in four weeks.

The Dow dropped 630.15 points to 29,296.79, while the Nasdaq lost 420.91 points to close at 10,652.40.

Smaller company stocks also gave up more ground. The Russell 2000 index fell 50.36 points, or 2.9%, at 1,702.15.

Beyond higher interest rates, analysts say the next hammer to hit stocks could be a potential drop in corporate profits. Companies are contending with high inflation and interest rates eating into their earnings, while the economy slows.

Advanced Micro Devices fell 13.9% after it warned revenue for its latest quarter is likely to come in at $5.6 billion, below its prior forecasted range of $6.5 billion to $6.9 billion. AMD said the market for personal computers weakened significantly during the quarter, hurting its sales.

Levi Strauss fell 11.7% after it cut its financial forecast for its fiscal year. It cited the surging value of the U.S. dollar against other currencies, which weakens the dollar value of sales made abroad, as well as a more cautious outlook on economies across North America and Europe.

Treasury yields rose immediately after the jobs report’s release, though they wobbled a bit afterward. The yield on the 10-year Treasury, which helps set rates for mortgages and other loans, climbed to 3.89% from 3.83% late Thursday.

The two-year yield, which more closely tracks expectations for Fed action, rose to 4.31% from 4.26%. Earlier in the morning, it climbed above 4.33% and was near its highest level since 2007.

 

[bigdog]

The S&P 500 ended 2.8% lower after briefly dropping 3.3% as traders weighed a government report showing employers hired more workers last month than economists expected. The Dow Jones Industrial Average fell 2.1% and the Nasdaq composite lost 3.8%.

 

[bigdog]

SEA OF RED YESTERDAY

Asian shares fall as technology shares pull benchmarks lower

Asian shares are mostly lower as losses in technology-related shares weighed on global benchmarks. Taiwan dropped 3.8% after reopening from a holiday.

apnews.com

Stocks close lower on Wall Street ahead of earnings reports​

By DAMIAN J. TROISE and ALEX VEIGA

Wall Street added to its recent string of losses Monday, as stocks fell ahead of a busy week of inflation updates and the start of corporate earnings reporting season.

The S&P 500 fell 0.7%, extending its losing streak to a fourth day. The Dow Jones Industrial Average lost 0.3% after wavering between small gains and losses, and the Nasdaq composite fell 1%. The Dow and Nasdaq have also closed lower the past four trading days.

Small company stocks also fell, dragging the Russell 2000 index 0.6% lower. U.S. bond trading was closed.

Major indexes are coming off a volatile week where they notched out gains because of an early two-day rally that shielded stocks from several weak days.

Wall Street has been turbulent amid worries about stubbornly hot inflation and the Federal Reserve’s plan to tame high prices by raising interest rates. The goal is to slow economic growth and cool both borrowing and spending in order to get inflation under control, but the plan risks sending the economy into a recession

Investors will potentially get a more detailed picture of the Fed’s thinking on Wednesday when the central bank releases minutes from its latest policy meeting. That’s when the Fed made another extra-big interest rate increase of three-quarters of a percentage point

“Nobody’s arguing about whether inflation is falling, it’s simply the slope of the slide,” said David Kelly, chief global strategist at JPMorgan Funds. “The inflation battle is being won and the problem is the recession battle may be getting lost unnecessarily.”

Wall Street will also get important updates on inflation and more insight into how that is impacting retail sales.

The government on Wednesday will release its report on producer prices, which will provide details for inflation on the wholesale level for businesses. The closely watched report on consumer prices will be released on Thursday and a report on retail sales will be released on Friday.

The latest sales update could confirm that consumers are increasingly stretched financially, or at least pulling back on spending. That could send a signal to the Fed, Kelly said.

“I’m just hoping the Fed is watching these indicators,” he said. “It should tell them they’re much closer to both beating inflation and killing the economy than they think they are.”

Uncertainty about how the economy will weather future Fed rate hikes has helped keep trading choppy on Wall Street. The major indexes were all briefly in the green Monday, before ending up in the red by the end of the day.

The S&P 500 fell 27.27 points to 3,612.39. The Dow dropped 93.91 points to close at 29,202.88. The Nasdaq lost 110.30 points to 10,542.10. The Russell 2000 fell 10.23 points to 1,691.92.

Technology stocks were the biggest weights on the market. Makers of semiconductors and chip manufacturing equipment also suffered heavy selling after the U.S. government tightened export controls to limit China’s ability to get advanced computing chips, develop and maintain supercomputers, and make advanced semiconductors. Nvidia fell 3.4%

Energy stocks fell as the price of U.S. crude oil dropped 1.6%. Occidental Petroleum slid 5.6%.

Health care stocks also helped pull the S&P 500 lower. Pfizer lost 1.4%.

Industrial companies and others considered less risky, such as household goods makers, held up better than the rest of the market.

A busy week of closely watched economic reports comes amid the opening to the latest round of corporate earnings reports. Those reports, and statements from companies and corporate executives, could help provide a clearer picture of how high prices are impacting revenue and profits and the expectations for the rest of the year and even into 2023.

PepsiCo, Delta Air Lines and Walgreens are among the big companies reporting earnings this week. Several major banks will report their results on Friday, including JPMorgan Chase and Citigroup.

Inflation and recession risks remain at the top of the list for big concerns, but COVID-19 and its potential to worsen already slowing economic growth continues to linger. Stocks fell in Hong Kong and Shanghai on news of more lockdowns in China due to rising COVID-19 cases. Markets in Tokyo were closed for a holiday.

Casino and resort operators with operations in China slumped over worries about the impact from more lockdowns. Wynn Resorts fell 12.2% for the biggest decline among S&P 500 companies and Las Vegas Sands slid 7.6%

The S&P 500 fell 27.27 points to 3,612.39. The Dow dropped 93.91 points to close at 29,202.88. The Nasdaq lost 110.30 points to 10,542.10. The Russell 2000 fell 10.23 points to 1,691.92.

The S&P 500 fell 0.7%, extending its losing streak to a fourth day. The Dow Jones Industrial Average lost 0.3% after wavering between small gains and losses, and the Nasdaq composite fell 1%. The Dow and Nasdaq have also closed lower the past four trading days.

 

[bigdog]

Asian shares mostly lower ahead of price, earnings reports

Asian shares are mostly lower following another volatile day on Wall Street, as traders brace for updates on inflation and corporate earnings.

apnews.com

Wall Street ends mostly lower after another volatile day​

By DAMIAN J. TROISE and ALEX VEIGA

Another volatile run on Wall Street left stocks lower Tuesday, extending the market’s recent losses as traders brace for updates on inflation and corporate earnings.

The S&P 500 fell 0.7%, marking its fifth straight loss. The benchmark index had been down as much as 1.2% in the early going after a dour forecast from the International Monetary Fund stoked recession fears. It then gained as much as 0.8% before a late-afternoon reversal.

The Nasdaq composite also slid back into the red, ending 1.1% lower. The Dow Jones Industrial Average shed most of a 1.2% gain to finish 0.1% higher.

The major indexes came into the day with four straight losses. Recession fears have been weighing heavily on markets as stubbornly hot inflation burns businesses and consumers. Economic growth has been slowing as consumers temper spending and the Federal Reserve and other central banks raise interest rates

The International Monetary Fund on Tuesday cut its forecast for global economic growth in 2023 to 2.7%, down from the 2.9% it had estimated in July. The cut comes as Europe faces a particularly high risk of a recession with energy costs soaring amid Russia’s invasion of Ukraine.

Wall Street is closely watching the Federal Reserve as it continues to aggressively raise its benchmark interest rate to make borrowing more expensive and slow economic growth. The goal is to cool inflation, but the strategy carries the risk of slowing the economy too much and pushing it into a recession

“The market desperately wants a reason for the Fed to be able to stop tightening and the data recently hasn’t given them that opening with respect to inflation,” said Willie Delwiche, investment strategist at All Star Charts.

The S&P 500 fell 23.55 points to 3,588.84, and the Nasdaq dropped 115.91 points to 10,426.19. The Dow added 36.31 points to close at 29,239.19.

Technology accounted for a big share of the decline among S&P 500 companies. Chipmakers continued slipping in the wake of the U.S. government’s decision to tighten export controls on semiconductors and chip manufacturing equipment to China. Qualcomm fell 4%.

Banks and communication stocks also weighed on the market, keeping gains in health care and household goods makers in check

Smaller company stocks fared better than the broader market. The Russell 2000 index rose 1 point, or about 0.1%, to 1,692.92.

Markets in Europe and Asia slipped.

Uber fell 10.4% and Lyft slumped 12% following a proposal by the U.S. government that could give contract workers at ride-hailing and other gig economy companies full status as employees.

U.S. crude oil prices fell 2%.

Bond yields were mixed. The yield on the 10-year Treasury, which influences mortgage rates, rose to 3.93% from 3.88% late Friday. The yield on the 2-year Treasury, which follows Federal Reserve action, held steady at 4.30%. Bond markets were closed on Monday for a holiday.

The Fed will release minutes from its last meeting on Wednesday, possibly giving Wall Street more insight into its views on inflation and next steps

Investors still expect the Fed to raise its overnight rate by three-quarters of a percentage point next month. It would be the fourth such increase, which is triple the usual amount, and bring the rate up to a range of 3.75% to 4%. It started the year at virtually zero.

The government will also release its report on wholesale prices Wednesday, which will help provide more details on how inflation is hitting businesses. The closely watched report on consumer prices will be released on Thursday and a report on retail sales is due Friday.

“Everyone is still hoping that every inflation report will be the one that shows that presure is alleviating,” Delwiche said.

Wall Street is also gearing up for the start of the latest corporate earnings reporting season, which could provide a clearer picture of inflation’s impact, while also raising questions about whether the Fed should continue with its aggressive rate hikes.

Among the companies reporting quarterly results this week: PepsiCo, Delta Air Lines and Domino’s Pizza. Banks, including Citigroup and JPMorgan Chase, will also report results

The S&P 500 fell 0.7%, marking its fifth straight loss. The benchmark index had been down as much as 1.2% in the early going after a dour forecast from the International Monetary Fund stoked recession fears. It then gained as much as 0.8% before a late-afternoon reversal.

The Nasdaq composite also slid back into the red, ending 1.1% lower. The Dow Jones Industrial Average shed most of a 1.2% gain to finish 0.1% higher.

The S&P 500 fell 23.55 points to 3,588.84, and the Nasdaq dropped 115.91 points to 10,426.19. The Dow added 36.31 points to close at 29,239.19

 

[bigdog]

Asian stocks fall ahead of US inflation update

Asian stock markets have fallen ahead of the release of U.S. consumer price data that investors worry will show inflation still is hot, reinforcing the Federal Reserve’s plans for more aggressive interest rate hikes.

apnews.com

Late slide sends Wall Street lower in more uncertain trading​

By DAMIAN J. TROISE and ALEX VEIGA

A wobbly day of trading on Wall Street ended with a modest pullback for stocks Wednesday as investors weighed a report showed that inflation remains very hot, likely paving the way for more aggressive interest rate hikes by the Federal Reserve.

A late-afternoon drop erased tentative gains that the major stock indexes had been clinging to for much of the day. The S&P 500 ended 0.3% lower, its sixth consecutive loss. The Dow Jones Industrial Average and the Nasdaq composite each slipped 0.1%.

Treasury yields, which have driven much of Wall Street’s recent trading, ended lower. The yield on the 10-year Treasury, which affects mortgage rates, fell to 3.90% from 3.95% late Tuesday. The yield on the 2-year Treasury slipped to 4.28% from 4.30%.

The market remained choppy following the afternoon release of the minutes from the Fed’s last interest rate policy meeting. The minutes underscored the central bank’s commitment to taming “unacceptably high” inflation. At the conclusion of that meeting last month, the Fed announced a hefty interest rate hike and signaled more large rate increases ahead

“The Fed minutes didn’t contain a lot of new information, but they did reiterate their intention to erring on the side of doing too much, rather than too little,” said Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance

The S&P 500 fell 11.81 points to 3,577.03. The benchmark index is down about 25% so far this year and is close to its lowest point in nearly two years.

The Dow dropped 28.34 points to 29,210.85, while the Nasdaq slipped 9.09 points to 10,417.10. The indexes are on pace for a weekly loss.

Utilities, technology companies and health care stocks weighed on the market, keeping gains elsewhere in check. Duke Energy fell 4%, Texas Instruments slid 1.2% and Abbott Laboratories closed 1.6% lower.

PepsiCo rose 4.2% after raising its profit forecast for the year following encouraging quarterly financial results.

Cruise line operators were among the biggest gainers in the S&P 500. Carnival rose 10.1%, Norwegian Cruise Line gained 11.6% and Royal Caribbean climbed 11.5%.

Small company stocks also lost ground. The Russell 2000 index fell 5.15 points, or 0.3%, to 1,687.76

Markets have been volatile all week as investors wait for the latest round of big company earnings reports and fresh reports on inflation and retail sales.

A report from the government showed that inflation at the wholesale level eased last month, though it was a bit worse than economists expected. A more closely watched component of the inflation data matched economists’ forecasts.

Inflation updates are being closely watched by investors who worry that stubbornly high prices on everything from food to clothing could lead to a recession. Those worries have been worsened by central banks around the world raising interest rates to make borrowing more expensive and slow economic growth.

The Federal Reserve has been particularly aggressive, and its strategy carries the risk of stalling an already slowing economy and causing a recession

In the minutes from the central bank’s Sept. 20-21 meeting, Fed policymakers judged that a “softening of the labor market” — likely including higher unemployment — would be needed to curb the nation’s inflationary pressures. They noted that hiring remained “robust,” which itself fuels high inflation as wages rise sharply.

A closely watched report on consumer prices is due Thursday and data on retail sales for September is due Friday. Both reports could help give Wall Street a clearer picture of where prices remain hottest and how consumers are reacting.

The corporate earnings season begins in earnest this week. Domino’s Pizza and Walgreens will report their results on Thursday. Big banks, including Citigroup and JPMorgan Chase, will report results on Friday.

The British pound weakened against the U.S. dollar after the governor of the Bank of England, Andrew Bailey, confirmed the bank will not extend beyond Friday an emergency debt-buying plan introduced last month to stabilize financial markets.

Markets in Europe mostly fell.

The U.S. dollar has been gaining strength relative to other currencies amid increased recession fears. The Japanese yen declined to a 24-year low against the U.S. dollar to 146 yen-levels, raising expectations of an intervention to prop up the yen following one such move in September

The S&P 500 fell 11.81 points to 3,577.03. The benchmark index is down about 25% so far this year and is close to its lowest point in nearly two years.

The Dow dropped 28.34 points to 29,210.85, while the Nasdaq slipped 9.09 points to 10,417.10. The indexes are on pace for a weekly loss.

 

[bigdog]

Asian stocks gain after Wall St rebounds from inflation jolt

Asian stock markets have surged after Wall Street rebounded from a slump caused by worse-than-forecast inflation numbers.

apnews.com

Stocks mount biggest comeback in years; S&P 500 jumps 2.6%​

By STAN CHOE, DAMIAN J. TROISE and ALEX VEIGA

NEW YORK (AP) — Wall Street staged its biggest comeback in years Thursday, as stocks roared back from steep morning losses caused by a worse-than-expected report on inflation.

The S&P 500 jumped to a gain of 2.6%, a stunning reversal after earlier being down as much as 2.4% and touching its lowest level in nearly two years. The Dow Jones Industrial Average swung more than 1,500 points from its low to its high. The turnarounds were the biggest for each index since March 2020.

Other markets around the world likewise veered sharply from losses to gains, while analysts offered possible reasons for the reversal but little that was concrete.

Besides stocks, prices also initially tumbled for bonds and cryptocurrencies in the knee-jerk reaction to a disappointing report from the U.S. government, which showed inflation is spreading more widely across the economy. One component that’s closely followed by policy makers and investors accelerated to its hottest level in 40 years.

That forced investors to brace for continued, big hikes to interest rates by the Federal Reserve to get inflation under control, and the potential recession those moves could create. The Dow Jones Industrial Average fell as many as 549 points shortly after the report’s release, and the Nasdaq was down as much as 3.2%

The slump didn’t last. Stocks shot up, driving the Dow up 827.87 points, or 2.8%, at 30,038.72. The Nasdaq climbed 232.05 points, or 2.2%, at 10,649.15. The benchmark S&P 500, which was briefly up 3%, rose 92.88 points to 3,669.91. The gains ended a six-day losing streak for the S&P 500 and Nasdaq.

Smaller company stocks also rallied after an initial slide. The Russell 2000 rose 40.65 points, or 2.4%, to close at 1,728.41.

“Anybody who had a hope of a pivot or a pause or a slowing in Fed policy tightening for the next meeting, that’s been dashed today,” said Liz Young, chief investment strategist at SoFi. “I literally can’t even wrap my head around what the logic would be to buy (stocks) on any change in Fed policy.”

Stocks in Europe also flipped from losses caused by the U.S. inflation data, while Treasury yields pulled back a little from their initial surge. The value of the U.S. dollar against other currencies sank after initially jumping.

They’re the latest jagged, back-and-forth moves for markets, which have been swinging sharply due to all the uncertainties about economies around the world and how badly higher interest rates will hurt them.

Analysts said some data points buried deep within the inflation report may be offering hope that inflation is on its way to marking a peak and then easing, even though current conditions look dour. Others said technical reasons could also be helping to support markets, as some investors closed out of trades betting on declines following the inflation report.

“Hopefully it’s because people have dug into the details of the inflation report and noticed a few signs that we could get inflation relief by the end of the year,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments

“Markets have talked themselves off a ledge, so to speak, and they’re a bit more hopeful,” said Kristina Hooper, chief global markets strategist at Invesco.

Young noted that the drop in the dollar relative to other currencies, like the British pound, could be a tailwind for stocks, but not enough to cause such a sharp turnaround in the market.

“It’s nonsensical to me that the market would be up so strongly,” she said.

Most investors came into the morning already expecting the Fed to hike its key overnight interest rate by three-quarters of a percentage point next month, which would be its fourth straight hike that was triple the usual size.

But Thursday’s disappointing data caused some investors to expect a fifth such increase in December, dashing hopes that the Fed may begin downshifting soon. Bets increased for the Fed to pull its overnight rate above 5% by early next year. The federal funds rate started this year at virtually zero

Higher rates make buying a house, car or anything else purchased on credit more expensive, and the hope is that will slow the economy and job market enough to undercut inflation. But higher rates take a notoriously long time to take full effect, and the Fed risks causing a recession if it ends up going too far.

As the day progressed, and investors had more time to dig into the inflation report’s details, though, analysts said they perhaps saw some glimmers of hope. Even though what’s called “core” inflation accelerated last month, overall inflation including food and energy prices slowed by a touch.

The overall Consumer Price Index, also called CPI, was 8.2% higher in September than a year earlier, versus August’s 8.3% inflation.

“If you’re at least starting to see headline CPI cool, there’s hope that core CPI will follow,” Hooper said. “There’s definitely that thought process coming in.”

Quincy Krosby, chief global strategist at LPL Financial, said, “There’s a view that because CPI is a lagging indicator, the higher rates will increasingly slow down the economy and inflation will recede at a faster clip.”

Treasury yields pulled back a bit from their initial, early-morning leaps, lessening a bit of the pressure on stocks.

The yield on the 10-year Treasury, which helps set rates for mortgages and many other loans, rose to 3.96% from 3.90% late Wednesday. Earlier in the day, it topped 4%.

The two-year yield, which moves more on expectations for Fed action, rose to 4.48% from 4.29%. It crossed above 4.50% earlier in the morning.

Higher yields amp up the pressure on the economy not only by making loans more expensive and slowing growth. They also drag down prices for stocks, cryptocurrencies and nearly every other investment because they mean bonds are paying more in interest, which pulls some dollars away from other investments.

Investments seen as the riskiest, the most expensive or forcing investors to wait the longest for big growth have been the ones hit hardest by this year’s rise in rates

The S&P 500 jumped to a gain of 2.6%, a stunning reversal after earlier being down as much as 2.4% and touching its lowest level in nearly two years. The Dow Jones Industrial Average swung more than 1,500 points from its low to its high. The turnarounds were the biggest for each index since March 2020.

Stocks shot up, driving the Dow up 827.87 points, or 2.8%, at 30,038.72. The Nasdaq climbed 232.05 points, or 2.2%, at 10,649.15. The benchmark S&P 500, which was briefly up 3%, rose 92.88 points to 3,669.91. The gains ended a six-day losing streak for the S&P 500 and Nasdaq.

 

[CityIndex]

Volatility after the US CPI report was always to be expected, but not like that...

With an over 5% swing on the day, Thursday's session should go down as one of the most volatile on record. It's unclear what sparked the sharp reversal, but looking at how support kicked-in and prevented the S&P500 from building on its move below the major psychological level of 3500, the most likely explanation for the overnight price action could be a short-covering rally as the strong breakdown bears had been eyeing failed to materialise.

All trading carries risk, but it will be interesting to see if this bullish momentum continues into the weekend and we get a countertrend bounce over the near-term, or if this was just a brief pause before the next round of selling.