Headline News: The U.S. economy posted its first period of positive growth for 2022 in the third quarter, at least temporarily easing inflation fears, the Bureau of Economic Analysis reported Thursday. GDP, a sum of all the goods and services produced from July through September, increased at a 2.6% annualized pace for the period, against the Dow Jones estimate for 2.3%. That reading follows consecutive negative quarters to start the year, meeting a commonly accepted definition of recession, though the National Bureau of Economic Research is generally considered the arbiter of downturns and expansions. The growth came in large part due to a narrowing trade deficit, which economists expected and considered to be a one-off occurrence that won’t be repeated in future quarters. GDP gains also came from increases in consumer spending, nonresidential fixed investment, and government spending. Declines in residential fixed investment and private inventories offset the gains, the BEA said. The report comes as policymakers fight a pitched battle against inflation, which is running around its highest levels in more than 40 years. Price surges have come due a number of factors, many related to the pandemic but also pushed by the unprecedented fiscal and monetary stimulus that… Read More
Now the question we are getting is: when will this bear market end? Some pundits have suggested that the following events may act as the catalysts that mark the end of the downdraft: The mid-terms, when Republicans take a majority in Congress, when the Federal Reserve stops raising rates and inflation subsides, after we experience our next recession, and so on.
Headline News: The S&P 500 futures are down 28 points and are trading 0.7% below fair value. The Nasdaq 100 futures are down 198 points and are trading 1.7% below fair value. The Dow Jones Industrial Average futures are down 30 points and are trading 0.1% below fair value. The Nasdaq 100 futures suffer heavy losses, weighed down by Alphabet (GOOG) and Microsoft (MSFT). Things are holding up relatively better for the Dow and S&P 500 futures, which are drawing a measure of support from the notion that the Fed will take a less aggressive rate hike approach after the November meeting due to the emerging signs of an economic slowdown. Treasury yields are moving lower. The 2-yr note yield is down two basis points to 4.45%, and the 10-yr note yield is down five basis points to 4.05%. New lockdown measures have reportedly been implemented in Wuhan amid rising Covid cases. In other developments, UK Prime Minister Sunak has delayed the release of the government’s fiscal plan to Nov. 17. The weekly MBA Mortgage Applications Index was down 1.7%, with purchase applications down 2.0% and refinancing applications down 0.1%. (Michael Gibbs, Director of Equity Portfolio & Technical Strategy) Markets:… Read More
Headline News: Markets had nice gains on the day with advances of 1.34% on the Dow, 1.19% on the S&P, and 0.86% on the NASDAQ, but prices closed right at the short-term downtrend line on the S&P. 9 of 11 sectors were positive led by Health Care (+1.91%), Consumer Staples (+1.79%), and Tech (+1.38%). Despite the nice move higher, advancers only outpaced decliners by 1.36x to 1 on 53% up volume on the NYSE. Advancers barely led on the NASDAQ ad 1.04x to 1 on 51% up volume. Futures retreated from earlier gains as traders assessed a mixed bag of corporate earnings against the backdrop of the Federal Reserve’s ongoing rate-hike campaign. According to Bloomberg, about a fifth of S&P 500 companies had posted third-quarter earnings before today, with more than half outperforming estimates. Still, investors are concerned the effects of a slowing economy will be felt further down the line, with the Fed set to raise interest rates next week. (Michael Gibbs, Director of Equity Portfolio & Technical Strategy) Markets: The S&P 500 rallied past resistance at 3806.91, briefly touched the current downtrend line, and pulled back to close higher at 3797.34. RSI also continued to move higher, closing… Read More
Headline News: The S&P 500 futures are up 32 points and are trading 0.9% above fair value. The Nasdaq 100 futures are up 69 points and are trading 0.7% above fair value. The Dow Jones Industrial Average futures are up 285 points and are trading 0.9% above fair value. Equity futures are moving higher this morning, fueled by carryover upside momentum from last week’s turnaround effort. Global bond markets are also behaving better, acting as another upside-driving force. The UK gilt is down 26 basis points to 3.80% with growing expectations that Rishi Sunak will be elected Prime Minister and amid reports that Finance Minister Hunt is looking to potentially raise taxes. The 2-yr Treasury note yield is down four basis points to 4.46%, and the 10-yr note yield is down five basis points to 4.17%. Germany and the U.K. reported weaker-than-expected flash Manufacturing PMI readings for October, while Services readings from France and the U.K. also missed expectations. There is a notable weakness in Chinese stocks. Hong Kong’s Hang Seng dropped more than 6.0%. This comes after President Xi was elected to a third term, fueling worries about the state tightening control over the economy and carrying on with… Read More
Headline News: The S&P 500 futures are up 2 points and are trading 0.5% above fair value. The Nasdaq 100 futures are up 3 points and are trading 0.2% above fair value. The Dow Jones Industrial Average futures are up 113 points and are trading 0.4% above fair value. There’s a mostly positive disposition for equity futures this morning as Treasury yields pull back from overnight highs. The 10-yr note yield, which reached 4.18% earlier, sits at 4.13% now. The 2-yr note yield, which reached 4.62% overnight, sits at 4.58% now. Earnings news since yesterday’s close has generally been positive. Tesla (TSLA), however, has been a big exception with a disappointing miss on earnings and revenue estimates. It’s down roughly 5.0% in premarket action. Chinese authorities are debating shortening the coronavirus quarantine time for travelers, according to Bloomberg. Meanwhile, Beijing is locking down some residential compounds amid rise in coronavirus cases, according to Reuters. The yen is weakening, hitting 150.09 earlier, which marks its worst level since 1990. USD/JPY -0.1% to 149.79. (Michael Gibbs, Director of Equity Portfolio & Technical Strategy) Markets: The S&P 500 moved below support at 3712.00 and closed lower at 3695.16. The index is now back… Read More
Headline News: The S&P 500 futures are down 18 points and are trading 0.5% below fair value. The Nasdaq 100 futures are down 53 points and are trading 0.4% below fair value. The Dow Jones Industrial Average futures are down 117 points and are trading 0.3% below fair value. Equity futures reversed earlier gains as Treasury yields inched higher. Price action reflects skittishness about rates going even higher from here after Minneapolis Fed President Kashkari (2023 FOMC voter) said he believes the Fed might need to raise rates above 4.75% if there’s no improvement in core inflation, according to Reuters. The 10-yr note yield is up eight basis points to 4.08%, and the 2-yr note yield is up five basis points to 4.50%. Better-than-expected quarterly results from Netflix, Procter & Gamble, ASML, Travelers, and United Airlines have mitigated some selling interest. In overseas news, the Bank of England confirmed it would sell gilts in November but said it would hold off on selling longer-dated gilts this year. The UK’s September CPI jumped to 10.1% year-over-year, revisiting this year’s peak from July. President Biden announced the release of 15 million barrels of oil from the Strategic Petroleum Reserves to be delivered… Read More
Headline News: The S&P 500 futures are up 67 points and are trading 1.8% above fair value. The Nasdaq 100 futures are up 228 points and are trading 2.1% above fair value. The Dow Jones Industrial Average futures are up 475 points and are trading 1.6% above fair value. Equity futures are higher this morning thanks to carryover upside momentum from yesterday’s rebound. There’s some relief that bank earnings have been better than feared and a feeling the market was oversold on a short-term basis, which adds fuel to the rally effort. The BoA Fund Manager Survey showed cash allocation is at the highest level since 2001, acting as a contrarian rebound factor. UK Prime Minister Truss has apologized for recent market volatility but indicated she does not plan to step down. Meanwhile, the Bank of England refuted an FT report about a plan to delay quantitative tightening until the Gilt market calms. Secretary of State Anthony Blinken believes China will move to annex Taiwan on a “much faster timeline” than previously expected, according to Axios. White House will likely release 10-15 million barrels from the strategic petroleum reserve this week, but an export ban is not likely before the… Read More
Headline News: The S&P 500 futures are points up 41 and are trading roughly 1.3% above fair value. The Nasdaq 100 futures are points up 145 and are trading 1.4% above fair value. The Dow Jones Industrial Average futures are up 282 points and are trading 1.1% above fair value. Equity futures have a positive disposition this morning after the new UK Finance Minister, Jeremy Hunt, announced a reversal of almost all of the tax measures in the prior “mini-budget.” Mr. Hunt added that this would raise GBP 32 billion. This announcement has calmed the currency and UK gilt markets. The 10-yr gilt yield down is down 48 basis points to 3.91%. The US Dollar Index is down 0.3% to 112.99 with GBP/USD +1.0% to 1.1292. The 2-yr note yield is down five basis points to 4.45%, and the 10-yr note yield is down six basis points to 3.95%. Morgan Stanley Chief Strategist Wilson said in a note that there’s a good opportunity for the S&P 500 to have a sizable technical rally, assuming there are no major earnings disappointments or a recession. China reaffirmed its zero coronavirus policy, and President Xi added he is aiming to achieve a peaceful… Read More
Headline News: Stock futures rose Friday, building on the historic turnaround rally a day earlier as investors bet that inflation has peaked. Futures tied to the Dow Jones Industrial Average increased 314 points or 1.05%. S&P 500 futures gained 1.10%, and Nasdaq 100 futures ticked up 1.20%. Stock futures wavered in premarket trading on mixed results from big banks. JPMorgan Chase and Wells Fargo gained after revenue topped expectations, while Morgan Stanley and Citigroup both announced profit misses. The outlook for this earnings season is not good. Profit for S&P 500 companies increased a measly 2.4% in the third quarter, according to the latest analyst estimates collected by FactSet, the worst growth since the third quarter of 2020, the heart of the pandemic. When the third quarter began, earnings growth was expected to be 10% for the period, but rising costs and interest rates have eaten away at companies’ bottom lines. Leading up to the start of this reporting season, 65 S&P companies have issued negative guidance, compared to just 41 giving positive outlooks, FactSet data shows. (Carmen Reinicke and Tanya Macheel CNBC) Markets: The S&P 500 had a 5% swing after establishing a new low for the year… Read More
