MONDAY – The Dow Jones Industrial Average declined on Monday as surging interest rates and foreign currency turmoil pressured markets.
The British pound dropped to a record low on Monday against the U.S. dollar. Sterling at one point fell 4% to an all-time low of $1.0382. The Federal Reserve’s aggressive hiking campaign, coupled with U.K.’s tax cuts announced last week has caused the U.S. dollar to surge. The euro hit the lowest vs. the dollar since 2002. A surging greenback can hurt the profits of U.S. multinationals and also wreak havoc on global trade, with so much of it transacted in dollars.
Traders will be closely watching the S&P 500 on Monday for any break below its bear market low. The S&P’s low close for the year in June was 3,666.77. It closed Friday at 3,693.23 after trading briefly below that close. The benchmark’s intraday low for the year is 3,636.87. Any trade below those levels could drive more selling in the market.
On Friday, stocks ended a brutal week with the blue-chip Dow finding a new intraday low for the year and closing lower by 486 points. The broad-market S&P 500 temporarily broke below its June closing low and ended down 1.7%. The tech-heavy Nasdaq Composite lost 1.8%.
Another super-sized rate hike by the Federal Reserve last week was the catalyst for the latest leg downward in markets. The central bank indicated it could raise rates as high as 4.6% before pulling back. The forecast also shows the Fed plans be aggressive this year, hiking rates to 4.4% before 2022 ends.
Bond yields soared after the Fed enacted another rate hike of 75 basis points. The 2-year and 10-year Treasury rates hit highs not seen in over a decade. On Friday, Goldman Sachs slashed its year-end target for the S&P 500 to 3,600 from 4,300.
MONDAY – U.S. stocks dropped on Monday morning, putting the S&P 500 on track to fall back into bear market territory and possibly to a new low for 2022. A jump in short-term rates drove the negative sentiment as investors still reeling from a hotter-than-expected inflation report on Friday braced for the Federal Reserve to raise rates later in the week.
The short-term 2-year Treasury yield rose by 17 basis points to more than 3.22% Monday, reaching its highest level since 2007 as investors bet the Fed may have to get even more aggressive to squash inflation. At one point in the session, the 2-year rate traded above its 10-year counterpart for the first time since April, a so-called yield curve inversion seen as an indicator of a recession.
The major averages last week posted their biggest weekly declines since late January as investors grew increasingly concerned rising inflation will tip the economy into a recession. The Dow and S&P 500 fell 4.6% and 5.1%, respectively, while the Nasdaq Composite lost 5.6%. A chunk of those losses came Friday, when hotter-than-expected U.S. inflation data spooked investors. The Dow dropped 880 points, or 2.7%. The S&P 500 and Nasdaq lost 2.9% and 3.5%, respectively.
The Bureau of Labor Statistics reported Friday that the U.S. consumer price index rose last month by 8.6% from a year ago, its fastest increase since December 1981. That gain topped economists’ expectations. The so-called core CPI, which strips out food and energy prices, also came in above estimates at 6%.
On top of that, the preliminary June reading for the University of Michigan’s consumer sentiment index registered at a record low of 50.2.
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MONDAY – Stocks were flat Monday morning as the 10-year Treasury yield hit a new three-year high and a week of major first-quarter earnings reports kicked off.
The 10-year Treasury yield reached on Monday it highest level since late 2018, trading at 2.884% at one point. The yield was at 1.71% to begin March, but has shot higher as the Federal Reserve pivoted to a more aggressive tightening stance. That change has weighed on stocks and triggered concerns about an impending recession.
Several Dow blue-chip names report earnings this week, including IBM, Procter and Gamble, Travelers, Dow Inc, Johnson and Johnson, American Express and Verizon.
Technology bellwethers are also set to report quarterly earnings, with Netflix due on Tuesday and Tesla out on Wednesday. Snap reports Thursday. United Airlines, American Airlines and Alaska Air are also on the calendar, as are railroads CSX and Union Pacific.
Investors will be paying close attention to forward guidance, especially for comments on how companies are handling surging costs. March’s consumer price index reading released last week showed an 8.5% increase from a year ago, the fastest annual gain since December 1981.
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MONDAY – U.S. stocks were mostly flat Monday, as traders monitor the bond market’s warning signals about the economy.
Twitter ($TWTR) shares surged more than 25% after SEC filings revealed Elon Musk purchased a more than 9% passive stake in the social media company. It comes less than a week after Musk polled his followers, questioning whether the social media giant follows free speech principles. Based on Twitter’s Friday closing price, the stake is worth $2.89 billion.
An often-cited recession signal was triggered Thursday evening when the the 2-year and 10-year Treasury yields inverted for the first time since 2019. The 5-year note yield is also trading above its 30-year counterpart.
Investors are also monitoring the latest developments in Ukraine. German Chancellor Olaf Scholz said Sunday that Western nations will impost additional sanctions on Russia in the coming days.
Seasonally, April is generally one of the best months for stocks, edging higher in the last 20 years by 2.41% on average, MKM Partners’ JC O’Hara wrote in a note. Within the 16 of the last 17 Aprils, the S&P has also inched higher.
Friday’s positive session came despite March’s employment report, which fell short of economists’ estimates. The U.S. economy added 431,000 jobs during the month, while estimates from Dow Jones called for 490,000.
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U.S. stocks eased Wednesday as oil prices rose, renewing inflation fears.
The Dow Jones Industrial Average dropped about 410 points, or 1.2%. The S&P 500 declined 1%. The Nasdaq Composite dipped 0.9%.
Traders digested the latest news on the Ukraine-Russia war. Ukrainian President Volodymyr Zelenskyy called for more pressure on Russia from other countries as the conflict appears to be entering a stalemate.
Oil prices ticked higher on the day, with international oil benchmark Brent crude advancing nearly 5% to top $120 per barrel. U.S. crude gained around 4% to more than $114 per barrel.
The 10-year U.S. Treasury yield surpassed 2.41% at its session high Wednesday, the highest since May 2019. The benchmark rate has surged since the beginning of the week, when Federal Reserve Chairman Jerome Powell vowed to be aggressive on inflation. The Fed last week raised interest rates for the first time since 2018.
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U.S. stock futures rose in early morning trading on Wednesday as investors digested another batch of corporate earnings and tech shares looked to build on their rebound.
Through Tuesday’s close, the Nasdaq Composite has gained more than 6% from its recent low on Jan. 27 after falling into correction territory earlier this year.
Mortgage applications dropped 10% week over week, however, as the rise in interest rates in recent months appears to have dampened demand among homebuyers.
Yields have risen this year in part because of a more aggressive stance from the Federal Reserve. Atlanta Fed President Raphael Bostic told CNBC on Wednesday that three rate hikes are possible this year but that the central bank is not locked in to any path and will watch how the economy responds.
On Tuesday, the Dow Jones Industrial Average added more than 370 points, helped by a 7.8% pop in Amgen on the back of its strong earnings report. The S&P 500 also registered a gain, climbing 0.8%. The technology-focused Nasdaq Composite rose 1.3%.
As of the closing bell on Tuesday, nearly 60% of all S&P 500 companies have reported fourth-quarter earnings and roughly 77% have topped Wall Street’s earnings estimates, according to FactSet.
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– Stocks dropped on Monday, the first trading day of
December, as investors digested disappointing economic data along with
the latest trade news after capping a month that featured blistering
The Dow Jones Industrial Average fell 251 points, or 0.9%.
The S&P 500 pulled back 0.9% while the Nasdaq Composite traded 1.4%
lower. The major averages started off the session with slight gains
before turning lower.
Shares of Facebook, Amazon, Alphabet and
Apple all dropped more than 1%. Netflix traded 2.7% lower. Roku, which
has been one of the hottest stocks of 2019, plummeted more than 15%.
The Cboe Volatility Index, which is regarded as the best fear gauge in the market, rose to 14.8 from 12.6.
losses came after a strong performance in November. The major averages
had their biggest monthly gains since June, rallying to record highs.
The S&P 500 climbed 3.4% last month while the Dow advanced 3.7%. The
Nasdaq rallied 4.5%.
Manufacturing activity in the U.S.
continued to contract last month, the Institute for Supply Management
said. The ISM Manufacturing PMI dipped to 48.1 in November. That’s below
an estimate of 49.4. Stocks hit their session lows after the data was
FRIDAY – Stocks hovered around the flatline on Friday but remained on track for solid weekly gains after trade optimism sparked a massive rotation out of bonds and lifted equities to record levels.
The Dow Jones Industrial Average traded 38 points lower, or 0.1%. The S&P 500 slid 0.1% while the Nasdaq Composite climbed 0.3%.
Disney was among the best-performing stocks on Wall Street after the company released its latest quarterly figures. Health care was the best-performing sector in the S&P 500, gaining 0.4%.
The major averages were poised to extend their weekly winning streaks despite Friday’s muted performance amid an improving tone around global trade
The Dow is up 1.1% week to date. The S&P 500 and Nasdaq Composite are up 0.6% and 0.8%, respectively, for the week. It would be the third straight week of gains for the Dow while the S&P 500 headed for its fifth straight weekly gain. The Nasdaq was on pace for a six-week winning streak.
Sentiment was also boosted this week by corporate earnings results that have generally beaten expectations. Of the 425 S&P 500 companies that have reported thus far, 74% have beaten estimates.
FRIDAY – U.S. stock futures pointed to a little changed open on Friday following a record-setting session for the major stock indexes.
Around 7 a.m. ET, Dow Jones Industrial Average futures were unchanged but pointed to a gain of 33 points at the open. S&P 500 and Nasdaq 100 futures pointed to a flat open.
The small implied gain for the Dow comes after Disney shares jumped more than 5% on great earnings. Disney’s revenues for its media and networks segment topped estimates, while sales for the company’s parks, studio entertainment and direct-to-consumer businesses also beat expectations.
Stocks rose to record highs on Thursday after the world’s two largest economies reportedly agreed to remove existing trade tariffs, sparking a huge rotation into equities and out of bonds. The U.S. 10-year Treasury yield jumped more than 15 basis points at one point on Thursday, its biggest upward move since the 2016 election.
The increasingly positive tone around global trade put the major indexes on track for solid weekly gains. Entering Friday’s session, the Dow is up 1.2% week to date. The S&P 500 and Nasdaq Composite are both up 0.6% for the week through Thursday’s close. It would be the third straight week of gains for the Dow while the S&P 500 headed for its fifth straight weekly gain. The Nasdaq was on pace for a six-week winning streak.
On the data front, consumer sentiment figures are due out at 10 a.m. ET, as well as wholesale trade numbers.
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U.S. stock index futures turned sharply
higher Thursday after China said the world’s two largest economies had
agreed to remove existing trade tariffs.
Around 8:30 a.m. ET, Dow
Jones Industrial Average futures were up 154 points, implying an
opening gain of 138 points. S&P 500 and Nasdaq 100 futures also
pointed to solid gains.
The gains put the Dow and S&P 500 on track to reach fresh record highs at the open.
Feng, a ministry spokesperson for China’s Commerce Ministry, said that
both sides had agreed to simultaneously cancel some existing tariffs on
one another’s goods, according to the country’s state broadcaster. The
ministry spokesperson said that both sides were closer to a so-called
“phase one” trade agreement following constructive negotiations over the
past two weeks.
One important condition for a limited trade
agreement, Feng insisted, was that the U.S. and China must remove the
same amount of charges at the same time.
On the data front, the latest weekly jobless claims numbers came in at 211,000, down slightly from 218,000 in the previous week.
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