Stock Market News Today, 10/20/23 – Stocks End Down, Led by Tech Sector

Last Updated: 4:38 PM EST

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) dropped 1.5%, 1.26%, and 0.86%, respectively.

The tech sector (XLK) was the session’s top loser, as it fell 1.69%. Conversely, the consumer staples sector (XLP) was the session’s leader, with a loss of 0.39%.

Furthermore, the U.S. 10-Year Treasury yield hit 5.001% during trading hours, the first time since July 2007. Similarly, the 30-Year Treasury yield also hit a high last seen 16 years ago after it rose to 5.1030%.

Last Updated: 2:47 PM EST

Stocks are in the red so far in today’s trading. Earlier today, Federal Reserve Bank of Cleveland Loretta Mester confirmed on Friday that the median FOMC prediction for one more rate hike this year is consistent with her current U.S. economic views.

However, she said that how the economy changes in relation to the outlook and how risks are shifting will significantly impact whether the Fed funds rate needs to increase from its current level and how long restrictive policy needs to be in place.

“In addition to upside risks to inflation, geopolitical uncertainty has risen, with implications for financial markets, oil prices, and global demand,” she said. “The slowdown in the Chinese economy, the possibility of an extended UAW strike, and the potential for a government shutdown later this year all pose some risks around the outlook.”

Like other Fed officials, Mester believes “it will be appropriate to keep the funds rate at its peak for some time.” Nonetheless, she indicated that the federal funds rate target range of 5.25%-5.50% is at or close to the holding point.

Last updated: 12:12PM EST

Atlanta Fed President Raphael Bostic emphasized on Friday that he doesn’t foresee the Federal Reserve trimming its policy rate until at least mid-2024. Stressing the need to be “cautious, patient, and resolute” to reduce inflation to 2%, Bostic supports the ongoing “higher-for-longer” stance. Although the Fed has increased interest rates for the past 18 months, Bostic predicts an economic slowdown yet dismisses the possibility of an imminent recession, citing continued economic momentum.

On the other hand, a Macro Think Tank report by Citi Research anticipates a “hard landing” in the first half of 2024. Pointing to historical data, the report suggests that a recession typically follows around 10 months after unemployment reaches its lowest point. While present data, including the addition of 336,000 new jobs in the first quarter, suggests strong economic activity, tightening credit conditions and rising real Treasury yields could decelerate the economy.

Although the Fed was projected to raise rates in November, the shift in focus to higher 10-year yields might substitute the need for an immediate rate hike. However, Citi Research doesn’t rule out potential rate hikes, possibly as soon as December.

Last updated: 9:30AM EST

Stocks opened lower on the last trading day of the week, with the Nasdaq 100 (NDX) down by 0.38%, while the S&P 500 (SPX) and the Dow Jones Industrial Average (DJIA) are down by 0.2% and 0.21%, respectively at 9:30 a.m. EST, October 20.

Meanwhile, the 10-year treasury yield crossed 5% for the first time since 2007 after Powell’s speech on Thursday.

First published: 5:21AM EST

U.S. Futures are trending mixed on Friday morning as treasury yields continue to climb higher and push stocks lower. Futures on the Nasdaq 100 (NDX) are down by 0.03%, while those on the S&P 500 (SPX) and the Dow Jones Industrial Average (DJIA) are up by 0.02%, 0.03%, respectively at 5:00 a.m. EST, October 20.

The 10-year treasury is floating near 4.95% at the time of writing after crossing the 5% mark yesterday. At the same time, the WTI crude oil futures are also inching higher, hovering near $90.37 per barrel as of the last check. Federal Reserve Chairman Jerome Powell’s speech did little to calm investor sentiment. Powell mentioned that he does not see additional interest rate hikes shortly while also mentioning that it will take time to get to the 2% targeted inflation rate.

The three major averages are on track to end the trading week on a negative footing. The Initial Jobless Claims data for the week ending October 14 also fell to the lowest levels in nine months, further pressurizing investor sentiment.

On the earnings front, shares of inverter solution company SolarEdge (SEDG) sank 21% in extended trading yesterday after it warned of lower profits and sales in the upcoming Q3 results. Also, shares of medical equipment company Intuitive Surgical (ISRG) fell 8.2% in after-hours trading after posting mixed Q3FY23 results. Noteworthy earnings scheduled for today include American Express (AXP), Schlumberger (SLB), and a handful of regional banks.

Further, Tesla (TSLA) stock lost 9.3% yesterday following its dismal Q3 results and Musk’s cautionary tone for the future. Furthermore, American cryptocurrency asset manager Grayscale Investments is on track to launch the first spot Bitcoin (BTC-USD) ETF (exchange-traded fund) in the U.S. Grayscale is seeking to convert its existing $18 billion Grayscale Bitcoin Trust (GBTC) to a spot Bitcoin ETF as per a regulatory filing dated October 19, pushing GBTC stock higher in regular trading.

Elsewhere, European indices are trading in negative territory on Friday following the bleak global investor sentiment and the persistently high bond yields.

Asia-Pacific Markets End Lower on Friday

Asia-Pacific indices finished lower on Friday following Fed Chair Powell’s speech and the steep rise in the U.S. bond yields. Also, Japan’s inflation data for September came in at 3%, higher than the targeted 2% rate. 

Hong Kong’s Hang Seng index and China’s Shanghai Composite and Shenzhen Component indices ended lower by 0.72%, 0.74%, and 0.88%, respectively.

Similarly, Japan’s Nikkei and Topix indices ended down by 0.54% and 0.38%, respectively.

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