After the Fed’s higher-for-longer stance on interest rates sent markets lower throughout the previous week, stocks rebounded on Thursday in an effort to recoup some of their losses.
The Dow Jones Industrial Average (DJI) increased by around 0.3% while the S&P 500 (GSPC) increased by roughly 0.6%. The advances were led by the tech-heavy Nasdaq Composite (IXIC), which increased 0.8%.
A new estimate for second quarter GDP showed no change from the previous estimate of 2.1%, as the major question of whether the Fed can successfully achieve a “soft landing” for the economy remains. Also, official numbers showed jobless claims last week rose marginally from the week prior to 204,000, compared with 215,000 predicted. Additionally, according to data from the National Association of Realtors, pending home sales fell 7.1% in August after increasing by 0.9% on a monthly basis in July.
Although stocks are showing some resilience after several days of significant losses, the Federal Reserve’s announcement that rates will stay higher for longer has roiled the markets. The 10-year Treasury yield’s (TNX) sharp increase in the bond market has slowed down a little bit, although it is still hovering around 4.6%.
The jump in oil prices, which reached new 2023 highs on Wednesday and have increased by more than 35% since the end of June, is putting pressure on both markets. Fuel prices are anticipated to rise as a result of that increase, making it difficult for the Fed to control inflation and decreasing the likelihood of a rate cut.
Thursday saw a decline in oil prices as West Texas Intermediate futures (CL=F) dropped under $92 a barrel after peaking at $95 earlier in the day. The price of Brent oil futures (BZ=F) was down at $95 after briefly approaching $97.
The PCE inflation reading, the Fed’s favourite indicator, will be released on Friday and will be the data highlight of the week. Some analysts, though, contend that it won’t be consistent price rises that force central bankers to take action, but rather American consumers’ voracious appetites and an overheated economy.
Shares of Micron (MU) dropped more than 4% as a result of the chipmaker’s announcement that its first-quarter loss will be worse than anticipated.
Stocks closed Thursday’s tumultuous trading session in the green after investors analysed economic data that revealed second quarter economic growth wasn’t as strong as first believed.
The Dow Jones Industrial Average (DJI) gained approximately 0.3% and the S&P 500 (GSPC) gained nearly 0.5%. The advances were led by the tech-heavy Nasdaq Composite (IXIC), which increased 0.8%.
The yield on the 10-year Treasury note (TNX) decreased marginally to just under 4.6%. Oil prices also decreased after recently reaching fresh highs for 2023. About 2% of a drop brought West Texas Intermediate (CL=F) below $92 per barrel. The price of Brent International (BZ=F) futures decreased as well, falling by about 1.5% to under $96 per barrel.
As the chipmaker’s stock increased by more than 5%, Advanced Micro Devices (AMD) took the top spot on the Yahoo Finance trending tickers page. CEO Dr Lisa Su said the AI industry is more open than it might seem on Wednesday at the 2023 coding conference.
After Peloton (PTON) announced a five-year partnership with Lululemon (LULU), the company’s shares increased by more than 6%. The agreement involves a clothing relationship and will make Peloton, a brand of at-home training equipment, the official digital fitness content supplier for Lululemon.
After jumping almost 7% at first following the announcement that Ryan Cohen would take over as CEO, GameStop’s (GME) shares were down more than 1%. Wall Street analysts questioned if the founder of Chewy’s lack of retail management experience would aid in GameStop’s revival.
With just over a day left in September, the major indices are down between 3% and 5%. However, the fourth quarter’s prospects for each of the months are improving.
September is consistently identified as the poorest month of the year in seasonality studies that examine all years in the S&P 500 going back 20, 30, or even 50 years. To be fair, we did anticipate positive outcomes for September at the end of August. When equities were substantially rising through July at the time, we saw that they also showed strong bullish tendencies for the remaining four months of the year.
However, 2023 chose to adopt the strategies from 1975 and 1985, in which September started off poorly before bouncing back in the fourth quarter.
For those keeping score, the original requirements are now only met by two of the years in our sample (1975 and 1985).
We reduced the original condition so that January through July be merely positive (as opposed to up more than 10%) in order to enhance the sample size while focusing on the negative back-to-back red months of August and September that we just experienced.
As a result, the years 1990, 1999, 2011, 2015, and 2016 are relevant, with (on average) positive results through the year’s end.
According to Freddie Mac, the rate on the typical 30-year fixed mortgage climbed to 7.31% from 7.19% the week before. Since mid-December 2000, when it averaged 7.42%, that rate has been at its highest level.
Rates followed the 10-year Treasury yield, which on Wednesday rose to its highest level since 2007 as worries about a potential US government shutdown intensified. The change also occurs a week after the Federal Reserve made a suggestion that it will maintain a higher benchmark interest rate for a longer period of time.
The rise in rates once more reduced homeowners’ purchasing power and gave them a compelling excuse to stay away from the market. Future rates may be considerably higher for people who are still looking.
After three gloomy trading days, stocks gained momentum and bond rates dropped from multi-year highs on Thursday afternoon.
The Dow Jones Industrial Average (DJI) increased by around 0.6% while the S&P 500 (GSPC) gained about 0.9%. The advances were driven by the tech-heavy Nasdaq Composite (IXIC), which increased 1.3%.
The yield on the 10-year Treasury (TNX) decreased marginally to 4.61%. Oil prices also decreased after recently reaching fresh highs for 2023. About 1% less West Texas Intermediate (CL=F) was traded at $93 per barrel. The price of Brent International (BZ=F) futures decreased as well, falling by around 0.75% to under $96 per barrel.
As rising mortgage rates reduced their purchasing power in the months leading up to the autumn, homebuyers withdrew from the market across the nation.
According to the National Association of Realtors, pending home sales decreased 7.1% in August compared to the previous month, which is a decline from the 0.9% monthly increase seen in July. The outcome was widespread and much worse than the 1.0% decline predicted by Bloomberg economists. Every region had a monthly and yearly decline.
Pending transactions decreased by 18.7% annually.
The index is a leading indicator of the health of the housing market, and its decline further emphasises how housing activity has been choked down by high mortgage rates, rising home prices, and a lack of available inventory. Seasonality might have also been important.
Since August, mortgage rates have been rising above 7%, which has decreased the number of homebuyers, according to Lawrence Yun, chief economist for the National Association of Realtors. Some prospective homebuyers are pausing and revising their expectations for the kind of home and its location to better suit their budgets.
Contract signings in the Northeast fell 18.2% from August 2022 levels and were down 0.9% from the previous month. Additionally, pending sales dipped 7.0% in the Midwest and 19.1% from a year ago.
In August, pending sales in the South fell 17.6% from the previous year while also falling 9.1% on a monthly basis. Activity in the West decreased 7.7% from August 2022 and by 21.4%.
A flood of statistics from the Bureau of Economic Analysis released on Thursday showed that the US economy grew slightly more slowly than first estimates suggested during the second quarter.
The US economy expanded at an annualised pace of 2.1% during the second quarter, which was down from the first reading of 2.4% but remained steady from the second estimate. Bloomberg questioned economists who predicted the third reading would show 2.2% growth.
Since personal consumption growth was earlier estimated to have increased by 1.7%, it actually decreased by 0.8% in the second quarter.
Notably, the favoured inflation indicator of the Fed, the personal consumption expenditures index (PCE), increased by 3.7% throughout the quarter, matching the prior estimate.
According to Oxford Economics’ head US economist Michael Pearce, “the revisions do not have major implications for the Fed because they maintain the narrative of a resilient economy, and the recent inflation data were unrevised.” “What happens next is still the key concern.
In contrast to Fed officials, we anticipate a severe slowdown through the end of the year, which we believe will prevent policymakers from implementing the anticipated second rate hike.