Daily Newsletter Nov 01 '22
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Daily Recap
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Today's Recap
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Market Recap
The last trading session in October had a negative disposition. Part of that disposition could be attributed to some normal consolidation activity after a big run recently. The Dow Jones Industrial Average, the Russell 2000, and the S&P Mid Cap 400 all logged double digit gains this month.
The Dow had its best monthly performance since 1976 with a 14.0% gain.
There was likely some hesitation in play today ahead of the November 1-2 FOMC meeting and rate hike decision at 2:00 p.m. ET on Wednesday, which is followed by Fed Chair Powell's press conference at 2:30 p.m. ET. The hesitation was related to Mr. Powell's press conference and whether or not his comments will signal a softer approach from the Fed starting at the December meeting.
Market participants also digested an article from the The Wall Street Journal by Nick Timiraos that highlighted the risk of the Fed's terminal rate ultimately being higher than the market expects and staying there for longer due to excess savings and the resilience of consumer spending.
On top of that, participants received some economic news that played into some stagflation fears. China's official manufacturing PMI for October checked in at 49.2 while its non-manufacturing PMI checked in at 48.7. A reading below 50.0 is indicative of contraction. Separately, the eurozone CPI hit a record-high 10.7% year-over-year in October.
Rising Treasury yields kept pressure on the stock market today. The 2-yr note yield rose seven basis points to 4.49%. The 10-yr note yield settled the session up seven basis points to 4.08%, but hit 4.10% soon after the close of the cash session. This move coincided with the stock market taking a noticeable turn lower.
Mega cap stocks had a weak showing today, leading the market lower. The Vanguard Mega Cap Growth ETF (MGK) was down 1.2% versus a 0.8% loss in the S&P 500 and a 0.4% loss in the Invesco S&P 500 Equal Weight ETF (RSP). Apple (AAPL 153.34, -2.40, -1.5%) suffered a decent loss after Reuters reported COVID measures in China could adversely affect iPhone production volume in November at the Foxconn manufacturing facility.
Broad based selling left ten of the 11 S&P 500 sectors in negative territory. Communication services (-1.7%) and information technology (-1.3%) brought up the rear while energy (+0.6%) sat alone in the green.
It was reported that the Biden administration might be considering a windfall tax on energy producers, although a follow up report from the Associated Press suggested that the tax is not likely to pass congress. WTI crude oil futures fell 1.6% to $86.50/bbl while natural gas futures rose 10.6% to $6.59/mmbtu.
Arconic (ARNC), BP (BP), Eaton (ETN), Eli Lilly (LLY), Fox Corp. (FOXA), Gartner (IT), Lear (LEA), Marathon Petroleum (MPC), Molson Coors Brewing (TAP), Pfizer (PFE), Phillips 66 (PSX), Simon Properties (SPG), Sysco (SYY), and Uber (UBER) headline the earnings reports ahead of Tuesday's open.
Economic data today was limited to the October Chicago PMI, which came in at 45.2 (Briefing.com consensus 47.1) following the prior reading of 45.7.
Looking ahead to Tuesday, market participants will receive the following economic data:
9:00 ET: September Job Openings (prior 10.053 mln)
10:00 ET: September Construction Spending (Briefing.com consensus -0.5%; prior -0.7%) and October ISM Manufacturing Index (Briefing.com consensus 50.0%; prior 50.9%)
Dow Jones Industrial Average: -9.9% YTD
S&P Midcap 400: -14.4% YTD
S&P 500: -18.8% YTD
Russell 2000: -17.8% YTD
Nasdaq Composite: -29.8% YTD
source: briefing.com
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