Last Updated 4:05 PM EST
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Stock indices finished today’s trading session in the red. The S&P 500 and the Nasdaq 100 lost 0.16% and 0.73%, respectively. On the other hand, the Dow Jones Industrial Average finished flat on the day.
The technology sector was the session’s laggard, as it lost 0.96%. Conversely, the real estate sector was the session’s leader, with a gain of 1.7%.
Furthermore, the U.S. 10-Year Treasury yield increased to 3.76%, an increase of more than seven basis points. Similarly, the Two-Year Treasury yield also increased, as it hovers around 4.48%. This brings the spread between them to -72 basis points.
Compared to yesterday, the market is pricing in a higher chance of a lower Fed Funds rate for June 2023. In fact, the market’s expectations for a rate in the range of 5% to 5.25% decreased to 38.6% compared to yesterday’s expectations of 40.2%.
In addition, the market is now also assigning a 29% probability to a range of 4.75% to 5%. For reference, investors had assigned a 28.6% chance yesterday.
Indices Remain Red Heading into the Close
Last Updated at 3:00PM EST
Stocks are in the red 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 0.1%, 0.3%, and 0.8%, respectively.
On Tuesday, the Conference Board released its Consumer Confidence report, which, as the name suggests, measures the consumers’ confidence in the economy. This report is believed to be a leading indicator for spending patterns, as optimistic consumers are more likely to spend as opposed to pessimistic ones.
For November, consumer confidence came in at 100.2, which was better than expectations of 100. However, this was lower than last month’s reading and marks the second consecutive month of declines.
It’s worth noting that consumer confidence has been on an overall downtrend since its post-pandemic peak of 128.9 in June 2021. Compared to November 2021, sentiment declined by 10.5% on a year-over-year basis.
Major Indices Turn Red in Volatile Trading
Last Updated 12:02PM EST
Equity markets are in the red halfway into Today’s trading session. As of 12:02 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are down 0.4%, 0.4%, and 0.8%, respectively.
On Tuesday, Standard & Poor’s released its United States S&P/Case-Shiller House Price Index Composite – 20 n.s.a. This report measures the change in house prices in 20 metropolitan areas.
On a year-over-year basis, home prices increased 10.4% in September, lower than the expected 10.8%. This is lower than last month’s reading of 13.1%. However, prices decreased -by 1.5% on a month-over-month basis, missing expectations of a -0.7% decline. This is on top of the previous month’s report of a -1.6% drop and represents the third straight month of declines.
However, it’s important for investors to remember that this report is for September, meaning that there is quite a substantial lag in the data. It is possible that the current picture is actually worse as the cost of financing a home continues to rise while purchasing power falls.
Major Indices Struggle to Find a Direction
Last Updated 10:00PM EST
Stock indices are flat to start Tuesday’s trading session. As of 10:00 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are all within 10 basis points of yesterday’s close.
The utilities sector (XLU) is the laggard so far, as it is down 0.75%. Conversely, the energy sector (XLE) is the session’s leader with a gain of 1.2%.
WTI crude oil remains below $80 per barrel as investors weigh the impact of the unrest in China, along with production increases from oil-producing countries and a softer demand outlook caused by recession fears.
Meanwhile, bond yields are higher to start the day, as the U.S. 10-Year Treasury yield is now hovering around 3.73%. 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 4.48%. As a result, the spread between the 10-Year and Two-Year U.S. Treasury yields is still negative, as it currently sits at -75 basis points.
Futures Up As China Reassures about Effective COVID-Control
First Published 7:00AM EST
U.S. stock futures were up in the early Tuesday morning as investors settled after the initial panic following China’s protests.
Futures on the Dow Jones Industrial Average (DJIA) gained 0.09%, while those on the S&P 500 (SPX) climbed 0.29%, as of 7:00 a.m. EST, Tuesday. Meanwhile, the Nasdaq 100 (NDX) futures advanced 0.47%.
At the end of the regular trading hours Monday, the S&P 500, the Dow, and the Nasdaq 100 clocked losses of 1.54%, 1.45%, and 1.43%, respectively.
China Reassures Civilians of Declining COVID Cases
Investor worry eased after news came in that 65.8% of senior citizens over the age of 80 have been administered booster shots. Also, the first decline in COVID cases in more than a week was reported in mainland China.
Both updates came a day after China’s civilians broke into frustrated protests across the country with regard to continued COVID lockdowns.
Fed Officials Speak
Meanwhile, investors are also keeping a close eye on what Fed officials are saying. On Monday, New York Fed President John Williams said that the central bank’s fight with inflation may continue into 2024, and also reiterated that since interest rate hikes are involved, a recession is “clearly a risk out there given all of the uncertainty in the global economic outlook.”
Fed Chair Jerome Powell is scheduled to comment on the bank’s Fiscal and Monetary Policy at Brookings on Wednesday.
Other Economic Updates
On the economic front, the S&P CoreLogic Case-Shiller Home Price Index is due out Tuesday and will tell investors more about how the high mortgage rates are affecting housing prices. Last month, home prices climbed 13% year-over-year.
Consumer confidence data is also slated to be reported on Tuesday, showing investors how consumers are holding up in the inflationary environment.
Turning to the railroad unrest in the U.S., President Biden is pressing Congress to pass a rule to impose the contract that was rejected by four of the 12 railroad labor unions. If materialized, this move would put an end to the long-drawn labor dispute and potential disruption in the domestic movement of goods via railroads.
