Last Week’s Soured Sentiment Carries Over to New Week…..

U.S. equities finished lower in the first session of the first full week of October and Q4, with Communication Services and Information Technology applying the lion’s share of the pressure. Facebook was in focus and one of the largest laggards, as its shares tumbled in the wake of a Sunday evening interview of a company whistleblower surrounding some of the company’s inner workings. However, the Energy sector posted gains to extend a recent run, as crude oil prices hit a level not seen since 2014 following today’s meeting on oil production by OPEC and its allies, known as OPEC+, that concluded with no change to its originally agreed upon production campaign that surprised the markets. Adding to the negative sentiment, supply chain challenges continue to hamper global economic activity and boost inflation, while expectations remain elevated regarding tightening global monetary policies, and stalemates persist on Capitol Hill regarding raising the debt ceiling and infrastructure spending. Treasuries slipped to lift yields, and the U.S. dollar gave back some of a recent rise, while gold gained ground. In other equity news, Tesla posted stronger-than-expected record Q3 deliveries despite acknowledging supply chain and logistics challenges. Factory orders came in stronger than expected to kick off the economic week, which will see tomorrow’s key reads on September services sector activity precede Friday’s employment report. Europe finished mostly lower, while markets in Asia were mixed, with Hong Kong stocks continuing to see pressure.

The Dow Jones Industrial Average fell 324 points (0.9%) to 34,003, the S&P 500 Index decreased 57 points (1.3%) to 4,300, and the Nasdaq Composite lost 311 points (2.1%) to 14,255. In heavy volume, 1.0 billion shares were traded on the NYSE and 4.5 billion shares changed hands on the Nasdaq. WTI crude oil rose $1.74 to $77.62 per barrel. Elsewhere, the gold spot price gained $9.40 to $1,767.80 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—moved 0.2% lower to 93.82.

Factory orders(chart) rose 1.2% month-over-month (m/m) in August, versus the Bloomberg estimate of a 1.0% gain, and compared to July’s upwardly-revised 0.7% increase. Durable goods orders—preliminarily reported last week—were unrevised at a 1.8% gain for August, and excluding transportation, orders were favorably-adjusted to a 0.3% advance. Finally, nondefense capital goods orders excluding aircraft—considered a proxy for capital spending—were revised higher from a 0.5% gain to a 0.6% rise.

Treasuries dipped with yields volatile as the markets grappled with expectations that the Fed is moving closer to announcing that it will begin to rein in its extraordinary measures put in place to combat the impact of the pandemic, with economic growth forecasted to be above trend and inflation running hot.

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