Last Updated 4:00 PM EST
Stock indices finished today’s trading session in the green. The S&P 500 and the Dow Jones Industrial Average gained 0.48% and 0.59%, respectively. Meanwhile, the Nasdaq 100 finished flat.
The energy sector was the session’s laggard, as it lost 0.81%. Conversely, the utilities sector was the session’s leader, with a gain of 2.12%.
Furthermore, the U.S. 10-Year Treasury yield increased to 3.82%, a decrease of more than four basis points. Similarly, the Two-Year Treasury yield also increased, as it hovers around 4.53%. This brings the spread between them to -71 basis points.
Compared to yesterday, the market is pricing in a higher chance of a higher Fed Funds rate for the end of the year. In fact, the market’s expectations for a rate in the range of 4.25% to 4.5% decreased to 75.9% compared to yesterday’s expectations of 85.4%.
In addition, the market is now also assigning a 24.2% probability to a range of 4.5% to 4.75%. For reference, investors had assigned a 14.6% chance yesterday.
Indices are Mixed; Gasoline Prices Fall
Last Updated at 3:00PM EST
Stocks are mixed heading into the final hour of today’s trading session. As of 3:00 p.m. EST, the S&P 500 and the Dow Jones Industrial Average are up 0.1% and 0.3%, respectively. Meanwhile, the Nasdaq 100 is down 0.3%.
In addition, WTI crude oil is currently hovering around the mid-$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 $3.707 per gallon, down from last week’s reading of $3.794. 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 $5.341 per gallon. On the other hand, Texas is the state with the lowest gas prices, at $3.049 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 Turn Negative as Treasury Yields Rise
Last Updated 12:20PM EST
Stock indices are down halfway into today’s trading session. As of 12:20 p.m. EST, the S&P 500 and the Nasdaq 100 are down 0.2% and 0.8%, respectively. Meanwhile, the Dow Jones Industrial Average is flat.
The energy sector (XLE) is the laggard so far, as it is down 1.9%. Conversely, the utilities sector (XLU) is the session’s leader with a gain of 1.5%.
WTI crude oil fell below $80 per barrel due to a supply overhang. Indeed, European refiners have suddenly found themselves with too much oil as the expected shortage from the ban on Russian oil has yet to occur. WTI currently hovers around the high-$78 per barrel range.
Meanwhile, bond yields are higher, as the U.S. 10-Year Treasury yield is now hovering around 3.82%. This represents an increase of more than five basis points from the previous close.
Similar movements can be seen with the Two-Year yield, which is now at 4.50%. Currently, the spread between the 10-Year and Two-Year U.S. Treasury yields is still negative, as it currently sits at -68 basis points.
Stocks Rise; Existing Home Sales Fall
Last Updated 10:00AM EST
Stock indices are positive 30 minutes into 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 up 0.3%, 0.3%, and 0.2%, respectively
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 4.43 million for the month of October, above the expected 4.38 million.
Nevertheless, this figure was the lowest reading since June 2020, as existing home sales declined month-over-month by 5.9%, accelerating from the 1.5% decline in September. Indeed, this represents the ninth straight month of declines, as higher interest rates continue to make homeownership difficult. On a year-over-year basis, sales fell 30.1%.
It is likely that this downward trend will continue as the Federal Reserve continues to hike interest rates to combat inflation.
Futures Rise on Solid Earnings, Despite a Hawkish Fed
First Published 5:40AM EST
Futures were up early on Friday as investors as they cheered strong earnings results and digested hawkish comments from Fed officials, simultaneously.
Futures on the Dow Jones Industrial Average (DJIA) gained 0.39%, while those on the S&P 500 (SPX) jumped 0.57%, as of 5.40 a.m. EST, Friday. Meanwhile, the Nasdaq 100 (NDX) futures climbed 0.73%.
Companies that posted better-than-expected earnings results after the market closed on Thursday, including Gap (NYSE:GPS), Ross Stores (NASDAQ:ROST), and Palo Alto Networks (NASDAQ:PANW), buoyed after-market sentiments.
On Thursday, tech giant Cisco (NASDAQ:CSCO) gained 5% at the end of the regular trading session after posting solid earnings results.
Nonetheless, the major stock averages were down yesterday, with the S&P 500, the Dow, and the Nasdaq 100 shedding 0.31%, 0.02, and 0.19%, respectively.
Six officials of the Federal Reserve spoke at various events with a tone that investors have become quite familiar with by now. For instance, James Bullard, President of the St. Louis Federal Reserve clarified that the interest rate is not yet as restrictive as necessary, and the rate needs to be between 5% and 7% to effectively achieve the desired results. This is higher than what investors were gauging.
Needless to say, the U.S. Treasury yields got a boost with the short-term yield reaching 4.45% on the possibility that inflation has not cooled enough for the economy to recover.
Meanwhile, another piece of interesting information that came in was that large U.S. companies are actually increasing their capital spending even as fears of a potential recession loom. Capital spending among S&P 500 members is expected to have crossed $200 billion in the third quarter. This might encourage the Fed to keep increasing interest rates more aggressively.
Also, data on existing home sales and building permits are expected to be released on Friday, giving us another peak into the housing market. A cooling housing market is one of the indicators that the Federal Reserve’s policy strategy is working.
