Opening Comment — Tuesday, September 27, 2022
DJIA: 29,260.81, down 329.60
S&P 500: 3,655.04, down 38.19
Nasdaq: 10,802.92, down 65.01
Stocks rebound; U.S. dollar softens
U.S. equity futures are climbing Tuesday as Wall Street tries to recover from five-straight days of losses and the Dow and S&P 500 look to rebound from their lowest levels since 2020. The Dow is adding 1.1%, while the S&P 500 is advancing 1.3% in pre-market action. The Nasdaq 100 is trading 1.6% above fair value on the GLOBEX. Yesterday, equities finished lower as hawkish commentary from central bank officials weighed on investor sentiment. Boston Federal Reserve (Fed) President Susan Collins said additional rate hikes are needed to curb inflation, even though it may result in economic pain, while Atlanta Fed President Raphael Bostic reiterated the fight to curb inflation was the Fed’s first priority. Internationally, Bank of England Governor Andrew Bailey said the central bank is monitoring recent market turmoil closely and will “act accordingly” at their next scheduled meeting. The Dow lost 329 points, while the Nasdaq Composite shed 0.6%. The S&P 500 declined 1%, slipping below its mid-June level to notch a new low for 2022.
In commodities, West Texas Intermediate (WTI) crude is climbing off a nine-month low to add 1.5% to $77.86/barrel amid supply curbs in the Gulf of Mexico ahead of Hurricane Ian and a slightly softer U.S. dollar. Market participants also expect the Organization of Petroleum Exporting Countries and their allies (OPEC+) to announce a production cut in order to support prices at their meeting next Wednesday. In the metals complex, gold is bouncing off its lowest level since April 2020 amid a lower U.S. dollar and a pullback in Treasury yields. Spot gold is gaining 0.7% to $1634.50/ounce.
Across the pond, markets in the U.K. are recouping some losses after a historic sell-off following the U.K. government’s announcement of a new fiscal plan. Gilt yields are pulling back after the biggest surge on record, and the pound is recovering against the U.S. dollar. Elsewhere, Sweden has issued a warning about two gas leaks on the Russian-owned Nord Stream 1 pipeline. Overnight in Asia, the World Bank slashed its 2022 full-year growth forecasts for the East Asia and Pacific region from 5% to 3.2%. The organization cited China as the main reason behind slow growth. In FOREX trading, a gauge of the U.S. dollar is sliding 0.4% against a basket of currencies after soaring to a two-decade high yesterday.
On the domestic data front, a preliminary August reading on durable goods is expected to show a drop to -0.4% from July’s -0.1% print, while capital goods orders are anticipated to slip from 0.3% to 0.2% in the same period. Meanwhile, an update on housing prices from the FHFA is forecasted to remain unchanged in July. July’s reports from the S&P CoreLogic House Price Index and the S&P CoreLogic 20-City Index are also due today. Rounding out the docket will be an update on new home sales for August, the Conference Board Consumer Confidence Index for September, and the Richmond Fed Manufacturing Index for September. In the central bank space, multiple Fed officials are slated to speak throughout the day, including Fed Chairman Jerome Powell.
Closing Comment — Monday, September 26, 2022
DJIA: 29,260.81, down 329.60
S&P 500: 3,655.04, down 38.19
Nasdaq: 10,802.92, down 65.01
Stocks extend rout; oil slides
U.S. equities finished lower for the fifth-straight day on Monday as hawkish commentary from central bank officials weighed on investor sentiment. Boston Federal Reserve (Fed) President Susan Collins said additional rate hikes are needed to curb inflation, even though it may result in economic pain, while Atlanta Fed President Raphael Bostic reiterated the fight to curb inflation was the Fed’s first priority. Internationally, Bank of England Governor Andrew Bailey said the central bank is monitoring recent market turmoil closely and will “act accordingly” at their next scheduled meeting.
The Dow lost 329 points, while the Nasdaq Composite reversed earlier gains to shed 0.6%. The S&P 500 declined 1%, slipping below its mid-June level to notch a new low for 2022. Further pressuring sentiment was turmoil in currency markets. A gauge of the U.S. dollar soared 0.8% to a two-decade high, while the British pound sterling notched an all-time low against the greenback. Treasury yields continued their ascent, with the yield on the policy-sensitive two-year note adding 12 basis points (0.12%) to 4.31%. The benchmark 10-year note yield climbed 22 basis points (0.22%) to 3.90%, its highest level since April 2010, while the yield on the 30-year bond advanced 11 basis points (0.11%) to 3.72%. In commodities, West Texas Intermediate (WTI) crude shed 2.7% to $76.62/barrel to its lowest level since early January amid a surging U.S. dollar.
On the data front, the Chicago Fed National Activity Index came in at 0 (a neutral reading) for August, down from the prior month’s 0.29 print. The Dallas Fed’s Manufacturing Activity Index fell to -17.2 in September, down from August’s -12.9 figure.
Midday Comment — Monday, September 26, 2022
DJIA: 29,415.44, down 174.97
S&P 500: 3,676.34, down 16.89
Nasdaq: 10,877.39, up 9.46
Stocks mixed; yields soar
U.S. equities are mixed near mid-session Monday as investors remain on edge following last week’s flurry of central bank monetary policy decisions. Market participants are also parsing through statements from central bank officials. This morning, Boston Federal Reserve (Fed) President Susan Collins delivered hawkish commentary, saying additional rate hikes are needed to curb inflation, even though it may result in economic pain. Internationally, Bank of England Governor Andrew Bailey said the central bank is monitoring recent market turmoil closely and will “act accordingly” at their next scheduled meeting.
The Dow is losing 174 points, while the Nasdaq Composite is adding 0.1%. The S&P 500 is down 0.5%. Treasury yields are continuing their ascent, with the yield on the policy-sensitive two-year notes adding nine basis points (0.09%) to 4.28%. The benchmark 10-year note yield is climbing 14 basis points (0.14%) to 3.82%, while the yield on the 30-year bond is advancing five basis points (0.05%) to 3.66%. In commodities, West Texas Intermediate (WTI) crude is shedding 1.2% to $77.81/barrel amid a surging U.S. dollar and ongoing recessionary concerns.
On the data front, the Chicago Fed National Activity Index came in at 0 (a neutral reading) for August, down from the prior month’s 0.29 print. The Dallas Fed’s Manufacturing Activity Index fell to -17.2 in September, down from August’s -12.9 figure. Breadth on issues is negative by 3:1 on the NYSE and by 4:3 on the Nasdaq. Composite NYSE volume is greater than 1.8 billion shares.