Stock indices finished today’s trading session in the red, as the Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) fell 0.85%, 0.85%, and 0.75%, respectively.
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The consumer discretionary sector (XLY) was the session’s laggard, as it lost 2.56%. Conversely, the communication sector (XLC) was the session’s leader but still fell by 0.09%.
Furthermore, the U.S. 10-Year Treasury yield increased to 4.98%, a jump of six basis points. Conversely, the Two-Year Treasury yield decreased, as it hovers around 5.16%.
Last updated: 12:15PM EST
Indices are in the green so far in the trading session after Federal Reserve Chairman Jerome Powell recognized a slight easing in inflation, although he asserts it’s premature to identify a pattern. Speaking at the Economic Club of New York, Powell emphasized that despite a few months of positive data, more time is needed to confidently say inflation is steadily decreasing towards the Fed’s 2% target.
Interestingly, on a day when jobless claims dipped to their lowest level since early 2023, Powell hinted that to achieve the Fed’s inflation goal, there might be a need for some economic growth deceleration and a slight dip in the labor market. This observation underscores the ongoing tightness in the labor sector, which could further influence inflation.
Despite the Federal Reserve’s efforts, using interest rate adjustments to balance job market supply and demand, the strong job growth and slow layoffs observed in September could challenge their progress on inflation control. Powell suggests that continued above-trend growth or a stagnant labor market could necessitate stricter monetary policies, meaning higher rate hikes are possible. However, the use of the word “could” instead of “would” has market participants interpreting further rate hikes as unlikely.
Last updated: 11:30AM EST
Stocks are little changed so far in today’s trading. On Thursday, the National Association of Realtors released its U.S. Existing Home Sales report, which measures the change in sales of existing residential buildings during the previous month on an annualized basis. Existing home sales came in at 3.96 million for the month of September, above the expected 3.89 million. Still, this was the lowest level since 2010.
As a result, existing home sales decreased month-over-month by -2% after a -0.7% decrease in August. Indeed, existing home sales have increased only twice in the past 20 months as higher interest rates continue to make homeownership difficult.
Last updated: 9:30AM EST
Stocks opened higher on Thursday morning as the Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) are up by 0.43%, 0.25%, and 0.08%, respectively, at 9:30 a.m. EST, October 19.
Jobless claims in the week ending October 14 fell to a nine-month low of 198,000, while economists had forecast new claims to be 210,000. The jobless claims data beat expectations that layoffs would rise due to interest rate hikes. New jobless claims declined from a revised 211,000, sliding below the 200,000 mark for the first time since mid-January.
Meanwhile, the Philadelphia Federal Reserve’s manufacturing gauge continued to be in negative territory for the second straight month in October at a negative 9. A negative index indicates a contraction in manufacturing activity. Economists had projected a negative 6.8 reading in October.
First published: 4:14AM EST
U.S. Futures are down on Thursday morning in anticipation of Fed Chair Jerome Powell’s speech. Powell is slated to speak on the future course of monetary policy this afternoon. Futures on the Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) are down by 0.38%, 0.39%, and 0.32%, respectively, at 4:10 a.m. EST, October 19.
While markets largely expect a dovish stance from Powell, any reinforcements from his speech will act as a driving force. Indeed, treasury yields continue their ascent, with the U.S. 10-year treasury hitting all-time highs yesterday. As of the time of writing, the 10-year treasury is floating near 4.96%. At the same time, the WTI crude oil futures are losing strength, hovering near $87.40 per barrel as of the last check.
Turning toward earnings, results from American regional banks continue to flood the markets. Other notable companies reporting today include American Airlines (AAL), Taiwan Semi (TSM), AT&T (T), and Blackstone (BX). Further, traders await the Weekly Initial Jobless Claims data and Existing Home Sales report for September.
In the meantime, Tesla (TSLA) missed on both earnings and revenue expectations, dragging down its shares by nearly 5% in after-hours trading yesterday. CEO Elon Musk also cautioned investors about the mounting expenses to manufacture and ramp up production of the much-awaited Cybertruck while setting the initial delivery date of November 30.
Notably, shares of Illumina (ILMN) hit a fresh 52-week low of $124.40 and ended down 5.6% on October 18, after the news of activist investor Carl Icahn’s lawsuit hit the market. The hedge fund manager sued the gene sequencing company’s ex-CEO Francis DeSouza and the board members, citing failure to uphold their “fiduciary duties” concerning Illumina’s $7.1 billion acquisition of Grail.
On the contrary, Netflix (NFLX) stock surged 11% after beating Q3 expectations boosted by a soaring subscriber base. Plus, the company announced that it is increasing the price of its basic and premium plans in the U.S., U.K., and France to enhance profitability and the average revenue per customer. Also, shares of Las Vegas Sands (LVS) spiked 4.8% in extended trading yesterday after reporting a robust top-line beat for Q3FY23, while earnings came in line with estimates.
Elsewhere, European indices are trading in the red today amid the action-packed earnings season and the rising U.S. treasury yields. Moreover, the escalating Israel-Hamas war continues to weigh on investor sentiment.
Asia-Pacific Markets End Lower on Thursday
Asia-Pacific indices ended lower today as economic reports from across the regions dented investor confidence. Also, shares of Chinese EV makers collapsed in regular trading today following American EV maker Tesla’s dismal performance.
Hong Kong’s Hang Seng index and China’s Shanghai Composite and Shenzhen Component indices finished lower by 2.43%, 1.74%, and 1.65%, respectively.
Similarly, Japan’s Nikkei and Topix indices ended down by 1.91% and 1.36%, respectively.
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