Following three days of sharp losses caused by worries about how interest rates continuing to rise will affect the US economy, stocks sawsawed on Wednesday, finishing neutral.
While the Dow Jones Industrial Average (DJI) fell 0.2%, the S&P 500 (GSPC) ended slightly over the flatline. The heavily tech-focused Nasdaq Composite (IXIC) rose 0.2%.
The market gains occurred despite the oil price continuing to rise, hitting new 2023 highs on Wednesday, as well as an increase in Treasury yields. The benchmark 10-year Treasury yield (TNX) increased beyond 4.6%, reaching levels not seen in more than 15 years. Risk markets like equities have been hampered by the recent spike in rates.
Following a violent sell-off the previous day that caused the Dow to have its worst day since March, moves were made on Wednesday. Investors who were already concerned about the Federal Reserve’s statement that rates probably haven’t peaked yet were made even more anxious by declining consumer confidence and the prospect of a government shutdown.
The market has been progressively accepting that borrowing prices would remain high for longer than anticipated, which has caused stocks to decline recently. Analysts claim that some investors, however, might think the shakeout was exaggerated given the prospects of a rebound.
On the oil front, Brent (BZ=F) increased slightly to over $97 per barrel while West Texas Intermediate (CL=F) futures rose about 4% to settle around $94 per barrel.
The threat of a US government shutdown is, however, growing more unsettling as the weekend deadline for a budget agreement approaches. The Senate introduced a 79-page plan to finance the government through November 17 late on Tuesday, which is probably the final opportunity to prevent a shutdown.
Stocks ended Wednesday’s trading day with a mixed performance after swinging on either side of the flat line as investors continue to consider what the Fed’s higher for longer stance on interest rates implies for the markets.
The Dow Jones Industrial Average (DJI) fell 0.2%, while the S&P 500 (GSPC) barely closed in the black, up 0.02%. The heavily tech-focused Nasdaq Composite (IXIC) rose 0.2%.
The yield on the 10-year Treasury (TNX) increased to 4.66%. However, oil reached new records for 2023. To end the day at $93.68 per barrel, West Texas Intermediate (CL=F) increased by more over 3%. On Wednesday, Brent International (BZ=F) futures also increased, climbing more than 2.5% to $96.55 per barrel.
Brian Moynihan, CEO of Bank of America (BAC), claims that while the Federal Reserve “has won” the battle against inflation, other factors, such as the robust US consumer, may cause interest rates to remain higher for longer.
On Wednesday, Moynihan said the Federal Reserve needed to control inflation by decreasing US consumer spending, and that approach had been effective, according to the bank’s own data. Moynihan was speaking at a luncheon hosted by the Economic Club of New York.
Moynihan said of the Federal Reserve, “If you’re trying to engineer a soft landing… or something close to that, in balance, when you look at the current data, they’ve won.”
According to Moynihan, data from 68 million checking account holders at BOA demonstrates that US consumers have “slowed down” and are on track to spend at pre-pandemic rates “consistent with 2016, 2017, and 2018.”
They were aware of their tardiness. They quickly caught up. However, they now face a similar but different issue. They must exercise caution not to stray too far, he continued.
Bank of America, according to Moynihan, anticipates that the Federal Reserve will increase interest rates “one more time” in November, before cutting them three times in 2024 and four times in 2025. The US “won’t have a recession,” he continued, but there will be “very slow [GDP] growth” in the second and third quarters of 2019. He predicted that the quarterly GDP will rise back above 1%.
On Wednesday, Mark Zuckerberg, CEO of Meta (META), addressed the stage at his company’s Meta Connect conference to introduce two new cutting-edge headsets: the Ray-Ban Meta smart glasses and the AR/VR-enabled Meta Quest 3.
Both headsets are significant steps in Meta’s mission to establish itself as a metaverse-first business. The Quest 3 provides a preview of how Meta will combine the real and virtual worlds, and the smart glasses demonstrate how it can cram advanced technology into a comfortable pair of spectacles.
However, Meta is spending a fortune on marketing these products. Every year, the business unit Reality Labs of the corporation loses billions of dollars, including $3.7 billion in the most recent quarter. These headsets are necessary for Meta to become a metaverse firm in the future.
I had a chance to test out the Quest 3 and smart glasses at a preview event before the show on Wednesday, and I was delighted with the advancements Meta has made to both. Traditional gaming platforms and other headsets, such as Apple’s (AAPL) forthcoming Vision Pro, are formidable competitors for the business.
The Meta Quest 3 has a number of improvements over the Quest 2, including a slimmer design and crisper images, and it starts at $499. Meanwhile, the $299 Ray-Ban Meta smart glasses feature an updated design and sharper cameras for taking pictures and videos. The glasses go on sale on October 17, and The Quest 3 debuts on October 10 in physical and online stores.
The Quest 3 headset, in contrast to earlier models of Meta’s Quest headsets, is made with both augmented reality and virtual reality in mind. To achieve this, the manufacturer has enhanced the headset’s passthrough mode, which employs a number of external cameras to produce a live feed of the environment around you on the Quest 3’s internal screens.
The goal is to enable user interaction with virtual items that mimic real-world elements. During one demonstration, an alien ship slammed through the room’s ceiling and landed on the floor in front of me. The room’s walls started to be breached by several more aliens, revealing an alien world behind them.
The images were bright and vibrant all around. According to Meta, the Quest 3’s screen resolution is 30% higher than the Quest 2’s. And one demo in which Meta displayed how a game appeared on the Quest 2 and subsequently on the Quest 3 made this enhancement quite evident. Text on the screen was simpler to read, and details like the texture of a control panel stood out more. The Quest 3’s capabilities are expanded by the passthrough capability in another way.
However, the graphics are still inferior to those on current PCs or game consoles. Additionally, the Quest 3’s $499 pricing puts it in price competition with older consoles like Sony’s (SONY) PlayStation 5 and Microsoft’s (MSFT) Xbox Series X.
Following the announcement of the company’s quarterly earnings after the bell on Tuesday, Costco (COST) stock took the top spot on the Yahoo Finance trending tickers page on Wednesday. According to Bloomberg data, Costco’s adjusted earnings per share came in at $4.86, over the $4.7 projection from Wall Street. Revenue of $78.94 billion also exceeded expectations of $77.72 billion.
The wind and solar operator NextEra Energy (NEE) reduced its growth projections for the following few years, which caused the stock price to drop by close to 8%. In contrast to its previously recommended range of 12% to 15%, the company now aims for restricted partner distribution per unit increase of 5% to 8%.
Following the signing of a $250 million deal for artificial intelligence services with the US Army, Palantir (PLTR) shares increased by more than 4%.
As oil prices continued to rise on Wednesday, commodities entered the trending ticker page. In comparison to Brent (BZ=F), West Texas Intermediate (CL=F) increased by over 4% to almost $93.50 per barrel.