Last Updated 4:05 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 1.02%, 0.57%, and 0.75%, respectively.
The consumer discretionary sector was the session’s laggard, as it lost 0.26%. Conversely, the materials sector was the session’s leader, with a gain of 1.72%.
Furthermore, the U.S. 10-Year Treasury yield decreased to 4.14%, a decrease of more than seven basis points. Similarly, the Two-Year Treasury yield also decreased, as it hovers around 4.67%. This brings the spread between them to -53 basis points.
Compared to yesterday, the market is pricing in a higher chance of a lower 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% increased to 56.8%, which is up from yesterday’s expectations of 52%.
In addition, the market is now also assigning a 43.2% probability to a range of 4.5% to 4.75%. For reference, investors had assigned a 48% chance yesterday.
Stocks Rally; Small Business Optimism Continues Falling
Last Updated 3:09PM EST
Stocks are in the green heading into the close. As of 3:09 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are up 0.9%, 0.4%, and 0.4%, respectively.
On Tuesday, the National Federation of Independent Business released its monthly U.S. NFIB Small Business Optimism report, which measures the health of small businesses. Since small businesses make up approximately 50% of the workforce in the U.S., it’s an important metric to gauge.
For the month of October, the index came in at 91.3, in line with expectations. For reference, this is near the levels seen during April 2020. Indeed, the index is on an overall downtrend that began during the summer of 2021.
As a result, it’s clear that the Federal Reserve’s hawkish policies have been impacting small businesses that have fewer resources to navigate tougher economic conditions.
Stocks Rally; Gas Prices Rise
Last Updated 12:12PM EST
Stocks are in the green halfway into today’s trading session. As of 12:12 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are up 1.6%, 1.3%, and 1.8%, respectively.
In addition, WTI crude oil is down today as it hovers above $90 per barrel.
Although the commodity is well off its yearly highs, its recent uptrend has led to prices at the pump gaining upward momentum across the country.
Indeed, the national average for regular gas was last $3.804 per gallon, up from last week’s reading of $3.758. Still, this remains 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 $5.452 per gallon. On the other hand, Georgia is the state with the lowest gas prices, at $3.127 per gallon.
It’ll be interesting to see if this upward 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.
Indices Rise as Bond Yields Fall
Last Updated 10:00AM EST
Stock indices are in the green 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 0.7%, 0.3%, and 0.6%, respectively.
The energy sector (XLE) is the laggard so far, as it is down 0.8%. Conversely, the materials sector (XLB) is the session’s leader with a gain of 1.3%.
WTI crude oil is slightly lower but still remains above $90 per barrel as investors try to digest the mixed signals on China’s COVID-19 policy.
Meanwhile, bond yields are lower to start the day, as the U.S. 10-Year Treasury yield is now hovering around 4.15%. This represents a decrease of more than six basis points from the previous close. Similar movements can be seen with the Two-Year yield, which is now at 4.68%.
However, the Three-Month Treasury yield spiked over 11 basis points to 4.195%. This brings it once again above the 10-Year yield and represents a troubling sign for the economy.
Futures Up as Investors Await Midterm Results
First Published 6:56AM EST
Stock futures were up early Tuesday evening as investors mull over the outcome of the U.S. midterm elections on Tuesday.
Futures on the Dow Jones Industrial Average (DJIA) gained 0.27%, while those on the S&P 500 (SPX) climbed 0.39%, as of 6.40 a.m. EST, Tuesday. Meanwhile, the Nasdaq 100 (NDX) futures advanced 0.57%.
To some extent, the premarket sentiment was negatively influenced by over 18% slump in shares of Lyft (NASDAQ:LYFT), Tripadvisor (NASDQQ:TRIP), and Take-Two Interactive (NASDAQ:TTWO), on lackluster earnings released after the market closed on Monday.
The major indexes closed Monday on a positive note. The S&P 500, the Dow, and the Nasdaq 100 closed with gains of 0.96%, 1.31%, and 1.11%, respectively.
Midterm Election Results Day 0
Tuesday’s midterm election results will determine which party takes over Congress and influence future policy and spending. Currently, the U.S. Senate has 50 Republicans, 48 Democrats, two Independents who weigh with Democrats most of the time, and Vice President and Democrat Kamala Harris as the tie-breaking vote.
Stock market will likely see a rally if Republicans win back either the House of Representatives, the Senate, or both. Although taking back the house will be welcome news for the market, winning both the house and the Senate will be the biggest catalyst for a meaningful market rally.
Most market pundits are of the opinion that if Republicans win even one congressional body, any material policy changes may be avoided for the next two years. Notably, the Republicans favor big businesses and the plunge in the markets may tip the votes in their favor.
Nonetheless, the volatility in the market around the time of any major political event such as the midterm elections usually tapers off in a few weeks, as investors settle with the new change.
October’s CPI Data on Thursday
The consumer price index data for October is due on Thursday. The headline inflation (CPI reading that includes the prices of food and gas) is expected to have been around 8% year-over-year, down 0.2% from September.
If the number goes up sequentially, it is likely to attract more aggressiveness from the Federal Reserve in December, especially because the job market still stands strong.
