Last Updated 4:05 PM EST
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Stock indices finished Today’s trading session in the red. The Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 fell 1.95%, 2.08%, and 2.37%, respectively. The energy sector (XLE) was the session’s laggard, as it fell 4.86%. Conversely, the utilities sector (XLU) was the session’s leader, with a loss of 0.8%.
The Atlanta Federal Reserve updated its latest GDPNow reading, which allows it to estimate GDP growth in real time. The “nowcast” becomes more accurate as more economic data is released throughout the quarter.
Currently, it estimates that the economy will expand by about 4% in the fourth quarter. This is higher than its previous estimate of 3.6%, which can be attributed to recent data released from the U.S. Census Bureau and the U.S. Bureau of Labor Statistics.
Nevertheless, inflation continues to be a problem around the world. Tomorrow’s CPI report will allow investors to see if the inflation fight is improving or not. Currently, inflation is expected to come in at 8% on a year-over-year basis. Therefore, it’ll be interesting to see what the actual GDP growth will be and how it’ll change going forward as higher rates start to impact the economy.
Stock Market Losses Accelerate into the Close
Last Updated 3:00 PM EST
Stock market losses accelerate heading into the final hour of today’s trading session. As of 3:00 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are down 1.8%, 1.9%, and 2.3%, respectively. This is likely attributable to the midterm election results. Markets were expecting a red wave but got more modest Republican gains instead.
Investors believe that the market would’ve been better off with more Republicans, as it likely would’ve gotten a boost from energy and defense stocks.
Meanwhile, WTI crude oil continues to fall as it now hovers around the hig-$85 range.
In addition, bond yields are higher, as the U.S. 10-Year Treasury yield is now hovering around 4.15%. This represents an increase of more than two basis points from the previous close.
Similar movements can be seen with the Three-Month yield, which is now at 4.20%. However, the spread between the 10-Year and Three-Month U.S. Treasury yields is still negative, as it currently sits at -5 basis points.
Stocks and Crude Oil Fall; Gasoline Prices Rise
Last Updated 12:00PM EST
Stocks are in the red halfway into today’s trading session. As of 12:00 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are down 0.8%, 0.7%, and 0.9%, respectively.
In addition, WTI crude oil is lower today, as it hovers around the mid-$86 per barrel range. Today’s price action can be attributed to the Energy Information Administration’s (EIA) U.S. Crude Oil Inventories report, which showed that oil inventories increased by 3.925 million barrels week-over-week. This was higher than the 1.360 million that forecasters had expected.
However, this has yet to translate to lower gasoline prices. Indeed, the average price at the pump slightly increased to $3.805 per gallon compared to yesterday’s price of $3.804 per gallon. 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 $5.453 per gallon. On the other hand, Georgia is the state with the lowest gas prices, at $3.145 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 Fall; Mortgage Rates Rise
Last Updated 10:00AM EST
Stocks are in the red to start today’s trading session. As of 10:00 a.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are down 0.9%, 0.9%, and 1%, respectively.
On Wednesday, the Mortgage Bankers Association released its weekly report for the U.S. 30-Year mortgage rate. The mortgage rate increased to 7.14% compared to last week’s reading of 7.06%.
Due to the higher rates, the number of mortgage applications decreased week-over-week by -0.1%, following last week’s decrease of -0.5%. This indicates that sentiment in the real estate market is falling, which is consistent with other data that has been released so far.
In addition, mortgage application volume is down substantially on a year-over-year basis, with the Mortgage Market Index at 199.9 compared to 658.1 on November 10, 2021.
Futures Down as Midterm Election Grips Market
First Published 6:47AM EST
Stock futures were in the red as the midterm race tightened for the control of Congress.
Futures on the Dow Jones Industrial Average (DJIA) lost 0.22%, while those on the S&P 500 (SPX) dipped 0.10%, as of 6.34 a.m. EST, Wednesday. Meanwhile, the Nasdaq 100 (NDX) futures retracted 0.05%.
While the futures market was heavy with the election anticipation, Disney’s (NYSE:DIS) share price declined by more than 7% during the pre-market hours after posting an earnings and revenue miss for its fourth quarter fiscal 2022.
The S&P 500, the Dow, and the Nasdaq 100 ended Tuesday’s regular trading session with gains of 0.56%, 1.02%, and 0.75%, respectively.
Midterm Elections are Still Running Tight
The market is more likely to be hoping for a win by the Republicans in both the Senate and the House of Representatives, as that will ensure a boost for businesses.
If the Republicans can create a gridlock, it will be more difficult for economically impractical and hasty laws to be passed. A divided government has historically boded well for the stock market, and if gridlock is attained, the next two years are likely to get a break from major policy changes. This clarity would send the equity market rallying which can last until the end of this year.
The oil and gas sector stands to be one of the biggest gainers if the Republicans gain control of Congress. This is because the party is typically traditional in its thinking, and may steer the economy away from the movement toward clean energy. This will no doubt mean more capital influx into the oil & gas sector.
As of writing, the Republicans are leading the House but are marginally behind the Democrats in the Senate.
CPI Data Will Be the New Highlight Tomorrow
Looking ahead, all eyes will be on the consumer price index data for October on Thursday. This data will help investors gain better clarity on the inflationary situation and how the Federal Reserve might respond in its upcoming FOMC meeting due on December 13.
Anything above 3% inflation is considered high, but if inflation shows signs of cooling (especially the core inflation which excludes gas and food prices), then the Federal Reserve might give a chance to the idea of a pivot.
However, it is highly unlikely that inflation, even if it has cooled, to have reduced enough to lead the Fed to ease its policy. Interest rates are expected to keep going up until desired effects on the economy are consistently seen. The Fed may slow down its pace when the rates reach around 5% and keep it steady there until inflation comes down.
