Last Updated 4:05PM EST
Stock indices finished today’s trading in the red, near their session lows. The Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 fell 1.1%, 1.21%, and 1.32%, respectively.
WTI crude oil remains below $80 per barrel as investors weigh the impact of Putin’s ban on exports to countries that placed a price cap on its oil, along with a softer demand outlook caused by recession fears.
Meanwhile, bond yields are higher, as the U.S. 10-Year Treasury yield is now hovering around 3.88%. This represents an increase of more than three basis points from the previous close.
Similar movements can be seen with the Three-Month yield, which is now at 4.45%. As a result, the spread between the 10-Year and Three-Month U.S. Treasury yields is still negative, as it currently sits at -57 basis points.
Last Updated 2:00PM EST
Stocks are in the red heading into the final hours of today’s trading session. As of 2:00 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are down 0.6%, 0.7%, and 0.8%, respectively.
It’s no secret that interest rates have been rising in the past year, which has made the cost of borrowing more expensive. As a result, the amount of distressed debt has increased significantly over the past 12 months. Indeed, according to Bloomberg, distressed debt in the U.S. stands at roughly $250 billion, a four-fold increase compared to last year.
Unsurprisingly, the majority of this distressed debt can be found in the real estate industry, which often requires heavy borrowing due to the size of projects.
As a result, investors should be aware that more debt is likely to become distressed as the Federal Reserve continues hiking interest rates and as economic activity slows down.
Stocks Fall as Pending Home Sales Decline
Last Updated 11:12AM EST
Stocks have given up their early gains to turn negative in today’s trading session. As of 11:12 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are down 0.4%, 0.6%, and 0.8%, respectively.
On Wednesday, the National Association of Realtors released its Pending Home Sales report, which measures the month-over-month change in the number of home sales that have yet to close but are contracted to be sold. This measure excludes homes that are newly constructed.
During November, Pending Home Sales fell by -4% compared to October, which was worse than the expected -0.8% decline. This is on top of a 4.6% decline in the previous report. Of the 12 reports issued in 2022, only one of them saw an increase.
In addition, the Pending Home Sales Index came in at 73.9, which is lower than the 122.3 reading from the same time last year. This equates to an approximate decline of 39.6% on a year-over-year basis.
As a result, the overall trend in sales is downwards, as the cost of borrowing remains high and more houses hit the market. This has also caused houses to sit for longer periods of time on the market because there are fewer buyers who now have more options to choose from.
Last Updated 9:38AM EST
The major indices opened Wednesday’s trading in the green as the market snapped out of what could possibly have turned into a mild Santa Claus rally.
On Tuesday, the market ended with mixed sentiments from investors. The S&P 500 and the Nasdaq 100 lost 0.4% and 1.48%, respectively. Meanwhile, the Dow gained 0.11%. The Nasdaq Composite has lost 33.8% this year so far as growth stocks ran out of favor among investors. The S&P 500 is down 19.7% and the Dow has lost 8.5% this year thus far.
The losses in the Nasdaq 100 were led by an 11% dip in Tesla (NASDAQ:TSLA) shares after the Wall Street Journal revealed that the company plans to continue its weeklong production suspension in Shanghai.
The predicament of Tesla began earlier this year when its CEO, Elon Musk, compromised his focus on the electric vehicle maker and devoted his time and money to the purchase of Twitter.
Only three trading days are left in 2022 and stocks are heading to end the worst year since 2008.
The only things for investors to look forward to these three days are the pending home sales data and manufacturing data due out on Wednesday. These reports can give traders insights into whether the economy is slowing. A cooling economic activity may buoy the sentiments of investors as that would mean a possibly slower pace of interest rate hikes in 2023.
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