Last updated: 4:01PM EST
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Stock indices finished today’s trading session in the red. The Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) fell 1.41%, 1.34%, and 0.98%, respectively. Furthermore, the U.S. 10-Year Treasury yield increased to 4.9%, a jump of seven basis points. Similarly, the Two-Year Treasury yield also increased, as it hovers around 5.22%.
On Wednesday, the Federal Reserve’s Beige Book report indicated that economic activity remained largely unchanged in the majority of its 12 districts since early September. The report highlighted mixed consumer spending, particularly among general retailers and auto dealers, attributed to varying product prices and offerings.
The manufacturing sector displayed mixed activity but reflected an optimistic outlook. Interestingly, the labor market showed signs of improvement, with districts noting easier hiring conditions. However, challenges in hiring skilled tradespeople persisted. Despite these labor market improvements, prices continue to grow at a modest pace.
On the other hand, Federal Reserve Governor Christopher Waller conveyed a patient stance on adjusting the central bank’s policy rate. Waller identified two potential economic scenarios: one where the economy slows, balancing demand with supply, and another where consistent demand places upward pressure on inflation.
In the event of the latter scenario, Waller hinted at potential action to address inflation concerns. He also expressed his intention to monitor longer-term interest rates and their impact on the economy. Additionally, while he acknowledged the troubling events in the Israel-Hamas conflict, he doesn’t anticipate significant repercussions for the U.S. economy unless it escalates into a broader regional war.
Last updated: 11:43AM EST
Stocks remain in the red so far in today’s trading session as bond yields continue to climb. Indeed, the Five-Year Treasury yield hit its highest level in 16 years after reaching a high of 4.937%. This selloff in bonds has been caused by hotter-than-expected economic data, which has investors fearing that the Federal Reserve will have to maintain higher interest rates for longer than expected.
In fact, the market’s expectation of a rate hike in December by the Federal Reserve has been increasing, with the probability jumping from 26.3% to 41.6% on a week-over-week basis.
Last updated: 9:30AM EST
Stocks opened lower on Wednesday morning, with the Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) down by 0.7%, 0.45%, and 0.21%, respectively, at 9:30 a.m. EST, October 18.
Housing starts data showed that construction of new homes picked up pace in the month of September, rebounding by 7% to 1.36 million units as compared to a drop of 1.5% in August. This rise in the construction of new homes was slightly higher than economists’ expectations of an increase of 6.8%. Housing starts had peaked at 1.8 million in April last year.
Meanwhile, building permits, a sign of construction activity in the future, dropped by 4.4% to 1.47 million while economists had forecast a decline of 6% to 1.45 million.
First published: 4:41AM EST
U.S. Futures are trending down on Wednesday morning as treasury yields push higher. Futures on the Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) are down by 0.31%, 0.21%, and 0.09%, respectively, at 4:35 a.m. EST, October 18.
The stronger-than-expected retail sales data released yesterday reignited fears of additional interest rate hikes in the future. Indeed, the U.S. 10-year treasury yield is up, floating near 4.86% at the time of writing. And the WTI crude oil futures are also rising, hovering near $88.34 per barrel as of the last check. Today, markets anticipate September’s Housing Starts and Building Permits data.
Turning to the earnings season, notable players such as Tesla (TSLA), Procter & Gamble (PG), Netflix (NFLX), Morgan Stanley (MS), and Las Vegas Sands (LVS) are scheduled to report their quarterly results today along with a slew of regional bank stocks. Banks have outperformed expectations so far on the heels of high-interest rates, which have boosted their net interest incomes. Shares of United Airlines (UAL) fell in after-hours trading yesterday after the company issued soft guidance but topped earnings and sales estimates. Also, J.B. Hunt Transport Services (JBHT) stock declined about 4% in yesterday’s extended trade following disappointing third-quarter results.
Meanwhile, in a surprise deal, tech giant Microsoft (MSFT) has secured e-commerce giant Amazon.com (AMZN) as its biggest customer so far. In a $1 billion deal spanning five years, Microsoft is said to sell 1 million license seats of its Office 365 Suite to Amazon. Further, shares of Nvidia (NVDA) and Intel (INTC) fell yesterday after the Biden Administration expanded the restrictions on chip exports to China. Despite the new chip restrictions and fears about macro pressures impacting business, analysts remain bullish on Nvidia’s stock due to the generative artificial intelligence (AI)-induced demand for NVDA’s products and expect further upside even after a 200% year-to-date rally in the stock.
Elsewhere, European indices are trading mixed today as traders parse the corporate earnings releases. Notably, inflation in the U.K. remained at 6.7% in September, the same as the prior month. Additionally, core inflation (excluding food and gas) came in slightly higher than expected at 6.1%.
Asia-Pacific Markets End Mixed on Wednesday
Asia-Pacific indices ended mixed today following China’s GDP numbers. China’s National Bureau of Statistics reported that China grew by 4.9% in the September quarter, higher than expectations. At the same time, the U.S. new chip curbs dragged down the overall Chinese stocks.
Hong Kong’s Hang Seng index and China’s Shanghai Composite and Shenzhen Component indices finished lower by 0.23%, 0.80%, and 1.24%, respectively.
On the other hand, Japan’s Nikkei finished near the flatline and the Topix index ended up by 0.14%.
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