Click Here to view today’s Global Momentum Guide WEEKLY SECTOR MOVERS The Russell 2000 Index gained 2.25 percent last week, the Dow Jones Industrial Average 1.99 percent, the MSCI […]
Finally, we had a week with all the major market indexes finishing in the green. Monday and Tuesday, the markets had an impressive rally. Many traders said that the buying occurred because the stocks were looking oversold after a terrible September. Also adding to the rally was the rebalancing of portfolios at the end of the quarter.
During the two-day rally, the Dow Jones Industrial Average rallied more than 1,500 points, and the S&P 500 had its best two-day rally since 2020.
On Monday, the Dow Jones Industrial Average gained about 765 points, the S&P 500 climbed 2.6 percent, and the Nasdaq Composite advanced 2.3 percent. On Tuesday, The Dow Jones Industrial gained another 825 points, or 2.8 percent getting above 30,000 again, closing at 30,316.32. The S&P 500 gained another 3.1 percent, and the Nasdaq Composite added another 3.3 percent.
For the week, the Dow Jones Industrial Average was up 2.0 percent, the S&P 500 gained 1.5 percent, and the Nasdaq Composite added 0.7 percent. For the year, the Dow is down 19.4 percent, the S&P 500 is down 23.6 percent, and the Nasdaq has lost 31.9 percent.
On Tuesday, Twitter jumped 22 percent after Elon Musk decided he would agree to purchase Twitter for a price of $54.20 per share.
Helping the markets rally was the job openings data, which is pointing to a weakening in the labor market that the Federal Reserve has been looking for. A weakening labor market could signal the Fed will start easing its aggressive tightening.
The data showed that job openings dropped 10 percent in August and the fourth decline in the past five months. The gap between open jobs and the number of unemployed is still high by historical standards. It is starting to narrow, and companies have been slowing down the rate at which they hire before they cut jobs, which is why unemployment continues to be low.
But on Friday, the Jobs report came in hotter than most wanted to see. The job report proved that the labor market remains strong and resilient. It also showed that the Fed has more work ahead of them to slow down inflation and get closer to the 2 percent inflation rate.
The job report showed a gain of 263,000 in nonfarm payrolls, which was below expectations. The rate was the slowest monthly gain in a year and a half. The low unemployment rate is one of the critical reasons for inflation next to housing and renting costs.
Average hourly earnings increased 5 percent on a year-over-year basis, down from the 5.2 percent pace in August. Hourly earnings rose 0.3 percent on a monthly basis, the same as it was in August.
On Tuesday, a number that the Federal Reserve carefully watches, the Job Openings and Labor Turnover (JOLT) number came out showing that job openings dropped by 1.1 million from openings in August. Open job positions were 10.05 million for August, down from the 11.17 million open positions in July, according to the Bureau of Labor Statistics.
The drop is below the estimate of 11.1 million open positions, and the largest one-month drop since April 2020, at the start of the Covid pandemic. The ratio showed two job openings for every available worker in the United States. The ratio is now down to 1.67 to 1. These figures show that the tight labor market is beginning to loosen up.
As of Friday, futures pricing is now pointing to an 82 percent chance of a 0.75-point rate increase in November, a 0.5-point increase in December, and followed by a 0.25-point rise in February.
These rate increases would take the fed funds rate to a range of 4.5 to 4.75 percent. This rate is believed to be the point where the Federal Reserve stops increasing rates. Federal Reserve Chairman Jerome Powell said his decisions will be data-driven, and the next consumer price index report will have a lot to do with these decisions.
Upcoming releases for the week of October 10-14 include:
The Investor Guide to Fidelity Funds for October 2022 is AVAILABLE NOW! October Data Files Are Posted Below Market Perspective: Interest Rates Continue to Pressure Equity Prices Equities extended their slump […]
It was another depressing and down week for the major stock market indexes.
On Friday, the Dow Jones Industrial Average dropped 500.10 points or 1.71 percent, finishing at 28,725.52, closing under 29,900 for the first time since November 2020. The Nasdaq Composite dropped 1.51 percent, and the S&P 500 lost 1.51 percent, dropping to 3,585.62.
For the week, it was red across all major market averages. The Dow lost 2.9 percent, the S&P 500 fell 2.9 percent, and the Nasdaq Composite was down 2.7 percent.
Friday was the last day of the third quarter and typical of the entire month. For September, the Dow fell 8.8 percent, the S&P 500 lost 9.3 percent, and the Nasdaq tumbled 10.5 percent.
The S&P 500 index finished its worst month since March 2020, at the start of the pandemic and lockdowns. For the year, the Dow Jones Industrial Average is down 20.9 percent, and the Nasdaq Composite has tumbled 32.4 percent.
The Dow Jones Industrial Average with the S&P 500 and Nasdaq are all three in bear market territory. The Dow has declined more than 20 percent from its level in early January.
With rising interest rates, it has not been a good year for the bond market either. Bonds were down 1.0 percent last week, closing at $96.26, down 14.1 percent for the year.
Last week was a volatile week in the bond market, especially for the 10-year U.S. Treasury. The yield on the 10-year Treasury surged Tuesday to as high as 3.99 percent, its highest level in 14 years. During the next day’s trading session, the 10-year dropped to 3.71 percent, finally closing at 3.829 percent on Friday.
Adding to the down markets was a downgrade of Apple stock. Bank of America analyst Wamsi Mohan dropped their rating to a neutral from a buy. Apple shares fell nearly 5 percent, dragging dow
Mohan cited several risks with Apple stock, including a weaker buying cycle associated with the Apple iPhone 14, which Apple released last month. The day before, it was reported that Apple had dropped its plan to boost Apple iPhone production by 6 million units in the second half of 2022.
The Apple downgrade also took other tech stocks with it. Microsoft saw the smallest blow to its stock, which closed down about 1.5 percent, reaching a 52-week low. The parent company, Alphabet dropped 2.6 percent, also reaching a 52-week low. The Facebook parent company, Meta Platforms fell 3.7 percent, Amazon was off 2.7 percent, and Tesla tumbled 6.8 percent
Personal income increased 0.3 percent, as expected. Spending went up 0.4 percent after showing a decline of 0.2 percent in July. Inflation appears to be broadening with headline inflation, which includes food and energy, also sped up, despite a sharp drop in gasoline prices.
When the Federal Reserve started its fight against inflation, Federal Reserve Chairman Jerome Powell said that he wanted to cool off the housing market, and the labor market to help fight inflation. So far, the housing market has cooled very slightly, but rents remain high. Both go into the shelter category and are counted heavily in the consumer price index (CPI).
Last week, the initial filings for unemployment claims came in hotter than expected, which is not what the Federal Reserve wants to see. The initial unemployment claims fell to their lowest level n five months. Jobless claims totaled 193,000, down from 16,000 from the previous weekly report, below the estimated 215,000.
This week’s upcoming economic reports include:
Click Here to view today’s Global Momentum Guide WEEKLY SECTOR MOVERS The Russell 2000 Index declined 0.89 percent last week, the MSCI EAFE 1.57 percent, the Nasdaq 2.69 percent, […]
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