Stocks Declined in Anticipation for Next Week’s Fed Decision…..
U.S. equities ended the day lower in heavy trading volume, posting another weekly decline, as the markets remained skittish amid inflationary concerns. Hot inflation reports released earlier this week solidified expectations that the Fed, and other central banks around the world, will remain ultra-aggressive with their monetary policy. The markets appeared to be pricing in a 75-basis-point rate hike as the most probable outcome for next week’s Fed meeting. In equity news, FedEx offered earnings guidance that came in well below expectations, and also provided pessimistic comments on the global economy. As well, shares of GE fell after the company warned that continued supply chain issues will impact its cashflows. In light economic news, consumer sentiment, as reported by the University of Michigan, increased but at a lower rate than forecasted. Treasury yields were mixed, and the U.S. dollar was lower, while crude oil prices were mostly unchanged, and gold turned to the upside. Asia finished broadly lower despite upbeat data out of China, and Europe also saw losses, as the global markets remained uneasy amid the global inflation backdrop.
The Dow Jones Industrial Average declined 139 points (0.5%) to 30,822, the S&P 500 Index went down 28 points (0.7%) to 3,873, and the Nasdaq Composite lost 104 points (0.9%) to 11,448. In heavy volume, 7.5 billion shares of NYSE-listed stocks were traded, and 7.1 billion shares changed hands on the Nasdaq. WTI crude oil nudged $0.01 higher to $85.11 per barrel. Elsewhere, the gold spot price increased $6.30 to $1,683.60 per ounce, and the Dollar Index declined 0.1% to 109.67. Markets ended noticeably lower for the week, as the DJIA fell 4.1%, the S&P 500 dropped 4.8%, and the Nasdaq Composite tumbled 5.5%.
Consumer sentiment rises, but a shade below estimates…..
The preliminary University of Michigan Consumer Sentiment Index for September showed that sentiment improved less than expected, rising to 59.5 from August’s final reading of 58.2, but below the Bloomberg consensus estimate calling for a rise to 60.0. The index continued to move off the record low seen in June as the expectations component of the report increased noticeably to add to a modest rise in the current conditions portion. The 1-year inflation forecast decreased to 4.6% from 5.0% in August, and the 5-10-year inflation outlook decreased to 2.8%, from 3.0%, falling below the long-run range of 2.9%-3.1% for the first time since July 2021.
Treasury yields were mixed, as the yield on the 2-year note decreased 1 basis point (bp) to 3.85%, the yield on the 10-year note was unchanged at 3.45%, and the 30-year bond rate rose 4 bps to 3.52%.
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