Last Updated 4:03 PM EST
Stock indices finished today’s trading session in the green. The Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 gained 1.18%, 1.36%, and 1.48%, respectively.
The real estate sector was the session’s laggard, as it gained 0.47%. Conversely, the energy sector was the session’s leader, with a gain of 3.14%.
Furthermore, the U.S. 10-Year Treasury yield decreased to 3.76%, a decrease of more than seven basis points. Similarly, the Two-Year Treasury yield also decreased, as it hovers around 4.52%. This brings the spread between them to -76 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 41.8% compared to last week’s expectations of 31.9%.
In addition, the market is now also assigning a 23.9% probability to a range of 5.25% to 5.5%. For reference, investors had assigned a 9.5% chance last week.
Stocks Rally into the Close
Last Updated at 3:00PM EST
Stocks are near their session highs 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 up 1%, 1.1%, and 1%, respectively.
On Friday, Statistics Canada released its month-over-month Retail Sales report, which measures the change in inflation-adjusted sales for retailers. In September, sales decreased by -0.5%, in line with expectations. This comes after a 0.4% gain in August.
When removing the impact of automobiles, we get Core Retail Sales, which came in at -0.7% on a month-over-month basis. The expectations were for a -0.6% decrease.
This suggests that the Canadian consumer was slowing down in September, which is important for the American economy since Canada is its largest trading partner. However, it’s worth mentioning that the data is from two months ago, meaning that there is quite a considerable lag.
Indeed, preliminary data for October suggests that retail sales are rebounding, as it is estimated that they will increase by 1.5%.
Stocks are Positive; Gasoline Prices Fall
Last Updated at 12:00PM EST
Stocks are in the green 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 up 0.8%, 0.7%, and 0.5%, respectively.
In addition, WTI crude oil is trading higher today, as it now hovers around the $82 per barrel range. Nevertheless, the recent overall downtrend has caused prices at the pump to decline when compared to last week.
Indeed, the national average for regular gas was last $3.636 per gallon, down from last week’s reading of $3.759. 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 $5.205 per gallon. On the other hand, Texas is the state with the lowest gas prices, at $2.975 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 Rise as Treasury Yields Fall
Last Updated 10:00AM EST
Stock indices are in the green to start today’s trading session. As of 10:00 a.m. EST, the Dow Jones Industrial Average and the S&P 500 are up 0.8% and 0.5%, respectively. On the other hand, the Nasdaq 100 is relatively flat.
The communications sector (XLC) is the laggard so far, as it is down 0.3%. Conversely, the energy sector (XLE) is the session’s leader with a gain of 1.9%.
WTI crude oil climbed above $80 per barrel as investors try to shake off COVID-19 lockdown fears in China along with the potential increase in production from OPEC.
Meanwhile, bond yields are lower to start the day, as the U.S. 10-Year Treasury yield is now hovering around 3.78%. This represents an increase of more than four basis points from the previous close.
Similar movements can be seen with the Two-Year yield, which is now at 4.53%. The spread between the 10-Year and Two-Year U.S. Treasury yields is still negative and widening, as it currently sits at -78 basis points.
Futures Mixed as Investors Gauge Effects of China’s COVID-Resurgence
First Published 7:01AM EST
Stock futures are mixed on Tuesday morning as investors mull over another potential bout of COVID-19 lockdowns in China.
Futures on the Dow Jones Industrial Average (DJIA) lost 0.02%, while those on the S&P 500 (SPX) gained 0.01%, as of 6.48 a.m. EST, Tuesday. Meanwhile, the Nasdaq 100 (NDX) futures retracted 0.16%.
Yesterday, the S&P 500, the Dow, and the Nasdaq 100 retired with losses of 0.39%, 0.13%, and 1.06%, respectively.
China Edges Toward Another Lockdown
Trading on Monday was choppy after news spread about COVID-19 deaths in China. On Monday, reports coming in from China revealed that the country is in the middle of another wave of spiraling COVID-19 cases along with a spike in deaths. Several schools have already been shut and by the looks of it, China seems to be on the brink of another nationwide lockdown.
Taking lessons from the previous waves of lockdowns, investors are worried that another economic shutdown would be detrimental to businesses and, needless to say, supply chains. Chinese stocks took a hit on the news. Shares of Alibaba (NYSE:BABA) dipped more than 4% while JD.com (NASDAQ:JD) retreated 6.4%.
The technology sector in general suffered declines, dropping 1.13% on Monday, as investors moved away from growth stocks to safer bets in healthcare and utilities.
Railroad Strike Brought Back to the Table
Among other key events that took place on Monday is the rejection of the new White House-brokered wage deal by one of the two remaining railroad workers’ unions. This brings the number of unions that rejected the deal to four out of 12.
However, being one of the two largest unions, a rejection from members of the SMART Transportation Division brings the dispute closer to a railroad labor strike as soon as early December. A strike can lead to a massive disruption of the countrywide movement of goods.
Other Updates
On the U.S. economic front, a few Federal Reserve leaders are expected to speak on Tuesday. Their comments will possibly give us more clarity on their policy path for the December FOMC meeting.
Another batch of earnings are expected today, including those from Dollar Tree (NASDAQ:DLTR), Best Buy (NYSE:BBY), HP (NASDAQ:HPQ), and Nordstrom (NYSE:JWN).
