Last Updated 4:05 PM EST
Stock indices finished today’s trading session in the red. The Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 lost 0.13%, 0.39%, and 1.06%, respectively.
The consumer discretionary sector was the session’s laggard, as it lost 1.46%. Conversely, the consumer staples sector was the session’s leader, with a gain of 0.96%.
Furthermore, the U.S. 10-Year Treasury yield remained flat at 3.83%. On the other hand, the Two-Year Treasury yield saw a slight increase, as it hovers around 4.56%. This brings the spread between them to -73 basis points.
Compared to last week, the market is pricing in a higher chance of a higher Fed Funds rate for June 2023. In fact, the market’s expectations for a rate in the range of 5% to 5.25% increased to 41.5% compared to last week’s expectations of 34.9%.
In addition, the market is now also assigning a 26% probability to a range of 5.25% to 5.5%. For reference, investors had assigned a 22.5% chance last week.
Stocks and Gasoline Prices Continue to Fall
Last Updated at 12:30PM EST
Stocks are in the red halfway into today’s trading session. As of 12:30 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are down 0.3%, 0.6%, and 1.3%, respectively.
In addition, WTI crude oil cut some of its earlier losses but is still lower on the day, as it hovers around the low-$79 per barrel range. The commodity’s overall downtrend has caused prices at the pump to decline when compared to last week.
Indeed, the national average for regular gas was last $3.662 per gallon, down from last week’s reading of $3.773. This is significantly lower than the all-time high of $5.016 per gallon on June 14.
The highest prices can be found in California, where prices are substantially higher than the national average, at $5.252 per gallon. On the other hand, Texas is the state with the lowest gas prices, at $2.995 per gallon.
It’ll be interesting to see if this downward trend will continue going forward as the Federal Reserve looks to raise interest rates to fight inflation while oil producers lower production in order to maintain the price.
Stocks Slip Along with Treasury Yields
Last Updated 10:00AM EST
Stocks are in the red to start today’s trading session. As of 10:00 a.m. EST, the S&P 500 and the Nasdaq 100 are down 0.3%, and 0.5%, respectively. On the other hand, the Dow Jones Industrial Average is flat.
The energy sector (XLE) is the laggard so far, as it is down 3.3%. Conversely, the consumer staples sector (XLP) is the session’s leader with a gain of 0.3%.
WTI crude oil remains below $80 per barrel as investors weigh the impact of weaker Chinese demand for the commodity. China continues to struggle with COVID-19 and has cut its oil purchases. WTI crude oil is currently hovering around the mid-$76 per barrel range.
Meanwhile, bond yields are lower to start the day, as the U.S. 10-Year Treasury yield is now hovering around 3.81%. This represents a decrease of more than two basis points from the previous close.
Similar movements can be seen with the Two-Year yield, which is now at 4.54%. As a result, the spread between the 10-Year and Two-Year U.S. Treasury yields is still negative, as it currently sits at -73 basis points.
Futures Down ahead of Thanksgiving
First Published 4:46AM EST
U.S. stock futures fell early on Monday as the market entered the historically quiet Thanksgiving week. Several pieces of key economic data as well as updates from the Federal Reserve are expected in this holiday-shortened week.
Futures on the Dow Jones Industrial Average (DJIA) lost 0.29%, while those on the S&P 500 (SPX) dipped 0.52%, as of 4:46 a.m. EST, Monday. Meanwhile, the Nasdaq 100 (NDX) futures declined 0.62%.
This week, investors are looking forward to the Durable Goods Sales report, new home sales data, weekly unemployment claims, and consumer sentiment data, all of which will reveal key trends in various parts of the economy. Moreover, minutes from the Fed’s last meeting will also be announced on Wednesday, revealing the tone of the central bank, which is largely expected to be hawkish.
On Friday, the S&P 500, the Dow closed 0.48% and 0.59% higher, respectively, whereas the Nasdaq 100 was largely flat.
Earlier this month, stock prices rallied on the back of cooler October inflation. However, after comments from Federal Reserve officials, investors are mulling over whether the rally has the strength to sustain or was just a dead cat bounce.
Inflation is still far above the Fed’s 3% target, and the Treasury yield curve is still inverted (a typical indication of an impending recession). Supply chain issues have eased but still have far to go in recovery.
Retail Sales Strong Despite Inflation
The market’s resilience has baffled experts, who believe that consumers are not optimally slowing their spending to bring down inflation despite an impending recession. This is keeping the Fed encouraged to continue with its aggressive policy.
In October, overall retail sales rose. However, Target (NYSE:TGT) warned of slowing demand for its offerings, and Amazon (NASDAQ:AMZN) laid off 10,000 employees (more layoffs expected in 2023) to reduce costs.
A fresh batch of retail earnings this week from Best Buy (NYSE:BBY), Nordstrom (NYSE:JWN), Dick’s Sporting Goods (NYSE:DKS), and Dollar Tree (NASDAQ:DLTR) will give us further information about the trends in the retail sector.
Railroad Unions to Determine the Fate of Domestic Supply Chain
Meanwhile, two large railroad unions — SMART Transportation Division and the Brotherhood of Locomotive Engineers and Trainmen — are expected to reveal later on Monday whether their members accepted or rejected the new wage deal contracted by the White House. A rejection may lead to a railroad strike, which can have disruptive effects on the supply of goods across the country.
The labor dispute, which has been dragging on for months, results majorly from low wages and difficult working conditions. Seven of the 12 unions have already approved of the deal and three have rejected it.
The market will remain closed for Thanksgiving on Thursday and will close at 1 p.m., ET (stock exchanges) and 2 p.m., ET (bond market) on Friday.
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