At closure, the Dow Jones Industrial Average (DJI) decreased by around 0.2%, while the S&P 500 (GSPC) turned slightly above the flatline. The historically low values in the technology sector were cited by Goldman Sachs strategists as a reason for the tech-heavy Nasdaq Composite’s (IXIC) 0.7% gain.
In an unexpected turn of events, Congress reached a last-minute agreement on Saturday to avoid a shutdown that had all but been set in stone. Investors who were worried about the possibility of serious harm to the economy and stock market felt some relief as a result. However, because the accord only provided a short-term extension to the fiscal wrangle, the relief might not last very long.
The Federal Reserve’s announcement that rates will remain higher for longer is still ringing in investors’ ears, and the key indexes continue to confront other challenges that have contributed to equities’ significant losses for the quarter and month on Friday. Treasury yields (TNX) and oil prices are both still on the rise and under increasing pressure. On Monday, the benchmark 10-year yield increased to a level slightly around 4.7%, nearing levels not seen in more than 15 years.
The September ISM Manufacturing Index was 49 on Monday. Although it exceeded analysts’ predictions, readings below 50 point to a contraction.
The United Auto Workers strike, which was expanded to several Ford and GM plants on Friday, is another issue that continues to loom over markets. Hopefully, the conflict between the UAW and Mack Trucks on Sunday will be resolved.
This week, the auto industry will release its third quarter deliveries data, which should assist the market assess the strike’s impact. Shares of EV manufacturer Tesla (TSLA) recovered an early dip as deliveries fell short of analysts’ expectations, while rival Rivian (RIVN) shares also came under scrutiny as its numbers above forecasts.
In other news, the World Bank cut its projection for China’s growth in 2024 while maintaining its forecast for 2023, raising concerns about demand in the second-largest economy in the world.
Investors are currently anticipating Friday’s September US jobs report, the economic highlight of the week.
Hollywood actors who are now on strike were scheduled to meet with studio executives on Monday as the two parties began fresh negotiations following the dramatic end of the writers’ strike last week.
The Alliance of Motion Picture and Television Producers (AMPTP), which negotiates on behalf of major studios like Warner Bros. (WBD), Disney (DIS), Netflix (NFLX), Amazon (AMZN), Apple (AAPL), NBCUniversal (CMCSA), Paramount (PARA), and Sony (SONY), and approximately 160,000 actors, announcers, recording artists, and other media professionals, and SAG-AFTRA, started a strike on July 14 after failing to reach an agreement.
In addition to greater salary and better working conditions, SAG-AFTRA is campaigning for more protections regarding the use of artificial intelligence in media and entertainment, much like the authors.
The ‘Magnificent Seven’ stocks are well known for contributing significantly to the S&P 500’s advances this year.
Due to the benchmark index’s recent posting of its worst monthly performance since 2023, they have also been leading the leg down during the past month. Some Wall Street strategists think the losses might be good for the index as a whole.
According to Liz Ann Sonders, chief investment strategist at Charles Schwab, “I wouldn’t be surprised to see a little more convergence.” In fact, I believe that a market scenario similar to what started in early June, when you started to see profit taking in that small group of companies but at the same time you saw an improvement in breadth under the broad index, would be beneficial.
The fact that profits are coming from a variety of companies rather than just a few is regarded as a crucial indicator of the market’s health. The Magnificent Seven companies, according to Sonders, are comparable to generals commanding an army. No matter how strong the generals are, the army will essentially be weaker if the other 493 companies, or the “soldiers,” don’t participate.
Sonders continued, “Even if the generals pull back and withdraw from the front line, if a group of men are up there, it’s a stronger front.
Although oil prices rose an average of 28% last quarter to year-to-date highs, several Wall Street analysts do not believe that these levels will endure.
According to Ines Ferré of Yahoo Finance:
Ed Morse, the global head of commodities research at Citi, and his team predicted that Brent will average $82 in the fourth quarter and $74 in 2024.
Following cuts in OPEC+ production and supply made by Saudi Arabia and Russia through the end of the year, oil prices have been on the rise. Russia’s restriction on exports has also helped to stabilise prices. This has led to “oil higher in a prolonged bull run, but 4Q’23 is set to move lower, with further 2024 downside,” according to the report.
Following several days of optimism that a deal would not be reached, President Joe Biden made a surprising about-face and signed a short-term stopgap extension to prevent a new government shutdown.
Business executives and economists had been fretting for weeks about the economic harm that a shutdown would unleash, particularly amid a period of unpredictability from the Fed’s battle to control inflation to volatile energy prices. The last-minute solution emerged as a result of their concerns.
Stocks were mixed on Monday morning, so Wall Street’s collective sigh of relief was not very loud. The action did nothing more than put off the inevitable, as lawmakers now have nearly six weeks to find a new solution before a new shutdown deadline of November 17. And after that possible clash, Washington faces an even tougher financial deadline on January 1, 2024, when the debt ceiling agreement from this summer mandates that discretionary federal spending will be reduced by 1% in the absence of an overall budget agreement.
According to Brian Sozzi of Yahoo Finance, “Wall Street chatter on how this debt ceiling drama is slowly eroding confidence in the country will likely see a groundswell.”
After receiving approval to start accepting payments in Singapore, the company’s bitcoin exchange increased by 2% on Monday morning. According to Coinbase, the Monetary Authority of Singapore has given the exchange a licence to provide payment services for digital tokens to both institutions and private investors. In response to the news, the price of bitcoin (BTC-USD) grew 4% and crossed the $28,000 mark for the first time since August.
Shares of Tilray: (TLRY) fell more than 2% following the completion of its all-cash purchase of eight beer and beverage brands from Anheuser-Busch (BUD), including Shock Top and Blue Point Brewing Company. The action is a component of the business’s diversification strategy and an effort to increase its capacity for producing beverages with cannabis infusions.