With a 1.1% decline, the Nasdaq 100 underperformed. Nearly 2% was lost by Apple Inc., which also revealed the iPhone 15 and other goods. Famous “sell-the-news” events, its launching are. Following a decrease in cloud revenues, Oracle Corp. experienced its biggest decline since 2002. At a time when the firm is attempting to convince investors to support it through an expensive transition to low-carbon energy, US-traded BP Plc shares fell as its chief departed. Energy stock prices rose as a result of a rise in crude, which increased worries about inflationary pressures. During a presentation at the Barclays Global Financial Services Conference, banks also made gains.
The yield on the two-year Treasury note, which is more susceptible to impending Fed actions, reached 5%. A day after a sale of three-year notes achieved the same result, the 10-year US Treasury note auction on Tuesday drew the highest yield since 2007 as investors demanded higher compensation for rising inflation and a rise in the supply of US government debt. The dollar grew little.
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The consumer price index on Wednesday is anticipated to indicate a rise in inflation pressures as the economy defies expectations and energy prices continue to rise. Swap traders presently believe there is a 50% likelihood that the Fed would deliver an increase in November but bet against it at the policy meeting scheduled for next week.
Lauren Goodwin, economist and portfolio strategist at New York Life Investments, stated that she believes now may be a good time for investors to think about allocation changes that would get them ready for a re-firming of inflation this autumn. “For instance, cyclical growth equity sectors rose on expectations of a supernatural deflation and impending Fed rate reduction. However, these sectors might forfeit some of their year-to-date gains if inflation returns.
Win Thin, global head of currency strategy at Brown Brothers Harriman, cites the Cleveland Fed’s Nowcast model as indicating upside risks for the CPI, with persistently high inflation also predicted in September.
We believe it would be dangerous to enter tomorrow’s CPI report short on dollars because inflation data is anticipated to continue to be sticky, Thin said.
CPI is crucial because, if it continues its downward path, markets would have to price in a more hawkish Fed, which would be detrimental to stocks, according to Tom Essaye, the founder of The Sevens Report newsletter and a former trader at Merrill Lynch.
In a more familiar manner, CPI affects two of the three pillars of the rally: disinflation and the belief that the Fed has stopped raising interest rates, according to Essaye. “Both will be damaged if CPI is too hot.”
Traders kept a tight eye on the talks being held to avert a strike between the United Auto Workers and automakers. The UAW, which is pushing for a new contract to replace one that will expire in just two days, is putting pressure on General Motors Co., Ford Motor Co., and Stellantis NV to comply with its demands. Even a brief strike would have an impact on the US economy. That may include briefly causing a recession in Michigan.
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The latest global fund manager poll from Bank of America Corp. revealed a “dramatic shift” in investors’ stock allocation, with a rush to the US and a flight from emerging countries.
This had an effect on the allocation to emerging market stocks, which decreased from 34% to a net 9% overweight in September—the lowest figure since November 2022. The survey found that allocation to US equities, on the other hand, increased by 29 percentage points to a net 7% overweight, the first overweight reading since August of last year.
According to Dan Wantrobski at Janney Montgomery Scott, the market is still near-term carving out a “rangebound glide path” and this may still be the case as we move through September and into the last quarter of 2023.
“Overall, we believe elevated volatility will reappear, but stocks may still experience more rally attempts over the short-term, making for a very choppy trading range,” the report said.
Depending on the US Federal Communications Commission’s clearance, T-Mobile US Inc. said it will purchase airwaves from Comcast Corp. for between $1.2 billion and $3.3 billion and complete the transaction by 2028.
Birkenstock has filed for an IPO, which is yet another indication of how alluring US equity markets are to European companies looking for a valuation boost.
Following Tuesday’s unveiling of Apple’s newest models, leading US telecom carriers launched free iPhone promotions.
The chief executive of Walmart Inc. forecast a “pretty good” holiday shopping season as US customers do better than the biggest retailer in the country had projected at the start of the year.
The US Justice Department said that Alphabet Inc.’s Google stifles competition by spending more than $10 billion annually to keep its place as the default search engine on web browsers and mobile devices.
The majority of United Parcel Service Inc.’s new, five-year labour agreement will be paid out over the following 12 months as it works to regain the customers it lost during the acrimonious contract negotiations, making for a difficult coming year, according to the company’s top executive.
In an effort to combat the intermittent nature of wind and solar power, Chevron Corp. will acquire a majority stake in what is anticipated to be the largest hydrogen production and storage facility in the world.