- Barry Adams
- 05 Dec, 2022
- New York City
Rate path worries resurfaced on Wall Street and bond yields rose and crude oil traded volatile.
Investors feared that the Federal Reserve may hike rates at a slower pace but rates may peak at levels above 5.25% and the economy may dip into a recession.
New orders for goods in October were ahead of expectations and the service sector index rebounded in November, fueling worries that the economy is too strong for the Fed to ease from the aggressive rate hikes.
The on-again-off-again recession and rate path worries gripped the market sentiment in the morning trading, dragging market indexes lower.
Bond Yields Rise
The yield on 2-year U.S. Treasury notes increased to 4.36%, 10-year Treasury notes inched higher to 3.58% and 30-year Treasury bonds edged up to 3.61%.
Markets Overview
The S&P 500 index fell 1.2% to 4,021.32 and the Nasdaq Composite index dropped 1.3% to 4,021.32.
Volatile Crude Oil Rebounds
Crude oil traded volatile with an upward bias after more cities in China relaxed coronavirus linked mobility restrictions, raising hopes of a rebound in China's import.
In addition, premier Xi Jinping is scheduled to commence his travel to Saudi Arabia on Wednesday this week and hold a summit with Arab leaders in Riyadh on Friday.
Crude oil increased 7 cents to $80.04 a barrel and natural gas fell 50 cents to $5.75 a thermal unit.
U.S. New Orders for Goods Rise
The new orders for manufactured goods in October, up twelve of the last thirteen months, increased 1.0% to $556.6 billion, the U.S. Census Bureau reported today.
This followed a 0.3% September increase.
New orders for manufactured durable goods in October, up seven of the last eight months, increased 1.1% to $277.4 billion, up from the previously published 1.0 percent increase.
This followed a 0.2% September increase.
Shipments increased 0.7% in October after rising 0.3% in September and unfilled orders, up twenty-six consecutive months, increased 0.6% to $1,144.0 billion.
U.S. Service Sector Growth Rebounds
The ISM Services Purchasing Managers' Index unexpectedly jumped to 56.5 in November of 2022, rebounding from a more than two-year low of 54.4 reached in October.
Stock Movers
Tesla Inc dropped 5.7% to $183.11 on the reports that the company is looking to cut Model Y production by more than 20% in its Shanghai factory this month. The news was first reported by Bloomberg.
China-linked stocks opened higher but gave up early gains on the hopes that China's relaxation of Zero-covid policy may revive travel and business activities.
Alibaba soared 9% and Baidu gained 4.5%.
China-based casino operators soared and Melco Resorts & Entertainment and Wynn Macau soared between 5% and 13%.
Marriott International declined 1.4% to $163.28 after the company announced its plan to sell $500million convertible senior notes due in 2027 in a private offering.
VF Corp declined 10.4% to $29.77 after the company said its chief executive plans to retire. Steve Rendle retired immediately from the positions of Chairman, President and Chief Executive Officer.
The apparel maker also lowered its sales growth outlook to between 3% and 4% in the second-half from the previous estimate of between 5% and 6% increase.
The company blamed the weakness on a higher-than-expected promotional environment in the U.S. and ongoing weakness in China and higher inflation impacting retail sales in Europe.
Activision Blizzard gained 0.9% to $76.44 on the news that Microsoft is ready to defend its $69 billion acquisition of the company against the U.S. antitrust ruling.
Science Applications International Corp increased 4.4% to $114.55 after the company reported quarterly results ahead of market expectations and the company lifted its estimate of sales and earnings for the full-year.
- Barry Adams
- 02 Dec, 2022
- New York City
Stocks rebounded from the lows of the session but major averages closed higher for the week.
Benchmark indexes faced selling pressure in the morning after the U.S. economy added more-than-expected jobs in November, fueling worries that the Fed may change its mind about moderating future rate hikes.
The strength of the labor market was not reflected in the labor participation rate as fewer people returned to labor force, despite the surge in cost of living and rising wages.
For the week, the benchmark indexes S&P 500 and Nasdaq Composite closed higher for the second week in a row amid rate path moderation optimism.
November Job Growth Shows Labor Market Strength
The U.S. economy added 263,000 net new jobs in November and the unemployment rate was unchanged at 3.7%, the U.S. Bureau of Labor Statistics reported Friday.
Leisure and hospitality, health care, and government led the net job gains but employment declined in retail trade and in transportation and warehousing.
Both the labor force participation rate, at 62.1%, and the employment-population ratio, at 59.9%, were little changed in November and have shown little net change since early this year.
These measures are each 1.3 percentage points below the levels in February 2020, prior to the coronavirus pandemic, the report noted.
Monthly job growth has averaged 392,000 so far in 2022, compared with 562,000 a month in 2021.
In November, average hourly earnings for all employees rose by 18 cents or 0.6% to $32.82 and extended gains to 5.1% over the last twelve months.
U.S. Markets Overview
The S&P 500 index fell 0.1% to 4,071.70 and the Nasdaq Composite index fell 0.2% to 11,461.50.
For the week, the S&P 500 index increased 1.1% and the Nasdaq Composite index rose 2.1%.
Crude oil fell $1.04 to $80.17 cents a barrel and natural gas declined 50 cents to $6.23 a thermal unit.
The yield on 2-year Treasury notes inched up to 4.28%, 10-year Treasury notes to 3.49% and 30-year Treasury bonds to 3.55%.
Stock Movers
Marvell Technology declined 3.8% to $43.67 after the chipmaker reported weaker-than-anticipated quarterly results.
Revenue in the fiscal third quarter increased 27% to $1.54 billion, near the lower end of the company's guidance on August 25.
In the third quarter, the company swung to a profit of $13 million from a loss of $63 million or 2 cents from a loss of 8 cents diluted share a year ago.
The company guided fourth quarter revenue of $1.4 billion and breakeven on diluted earnings per share.
Asana Inc dropped 11.1% to $16.06 after the work management platform operator reported wider loss than a year ago in its latest quarter.
Revenue in the fiscal third quarter increased 41% to $141.4 million and net loss expanded to $100 million or 49 cents from $69.2 million or 37 cents a year ago.
UiPath Inc increased 11.5% to $14.41 after the company reported quarterly results that surprised investors.
The enterprise automation software developer said the third quarter revenue increased 19% to $262.7 million.
Net loss in the quarter declined to $57.7 million from $122.7 million or 10 cents from 23 cents a year ago.
European Markets Advance 7th Week
European markets edged down in Friday's trading led by the oil and gas sector.
Across the eurozone, benchmark indexes closed higher for the week and closed up for the seventh week in a row.
Market sentiment was positive on the optimism that the Federal Reserve would moderate future rate hikes but Friday's jobs report kept investors on edge after stronger-than-expected job additions.
Eurozone Wholesale Inflation Drops
The eurozone wholesale inflation dropped to 30.8% in October from 41..9% in September, Eurostat said Friday.
The annual wholesale price increase was fueled by a 65.8% jump in energy prices after soaring 108.0% in September.
Producer prices, excluding food, rose 14.0% after rising 14.5% in September.
Compared to September, producer prices fell 2.9% after energy prices declined 6.9%.
Euro, Pound Rally Second Week
The bond yields declined on the hopes that future rate hikes will be moderated in the eurozone after the Federal Reserve consider slowing rate increases in December.
The yield on 10-year German Bunds edged down to 1.82%, French bonds eased to 2.3%, the UK Gilts to 3.14% and Italian bonds to 3.75%.
The euro inched higher for the second week in a row and closed at $1.05 and the British Pound advanced to $1.228.
The euro and the British pound closed at six-month highs.
Natural Gas Extends Weekly Losses
Brent crude oil declined 98 cents to $85.89 a barrel and Dutch TTF gas fell 2.5% to 136.56 euros MWh.
For the year so far, natural gas prices are still up 53% and Brent crude oil ahead by 23.6%.
Europe Markets Overview
The DAX index increased 0.3% to 14,529.39, the CAC-40 index fell 0.2% to 6,742.25 and the FTSE 100 index declined 2.26 points to 7,556.23.
For the week, the DAX index increased 0.06%, the CAC-40 index increased 0.5% and the FTSE 100 index increased 0.9%.
Europe Stock Movers
Resource stocks in London and across the eurozone declined ahead of the OPEC meeting on December 4th in Vienna, Austria.
BP Plc, TotalEnergies, Shell Plc, Equinor and Repsol SA dropped between 0.6% and 1.5%.
Standard Chartered, HSBC, Barclays, Deutsche Bank, Allianz, UBS and Unicredit dropped as much as 1.5% but managed to close higher after a recovery in the afternoon trading.
Credit Suisse soared 9.5% to 2.95 Swiss francs.
Wizz Air Holdings increased 0.03% to 2,300.79 pence after the deep discount carrier reported a 70% rise in passenger traffic from a year ago in November.
Asian Markets Overview
The Nikkei 225 average in Tokyo dropped to a three-week low and the yen edged higher as bond yields fell around the world.
China also initiated steps to unwound zero-Covid measures across many cities including Shanghai after sustained protests in several cities rocked the nation.
investors in India reacted to corporate news and awaited the next rate hike decision from the Reserve Bank of India.
The RBI is set to announce its rate decision after a three-day meeting ending on December 7 and investors are hoping for a rate hike of 35 basis points.
Passenger vehicle sales in India rose 32% from a year ago and sales were above 300,000 level for the sixth month in a row in November.
Auto sales are set to reach a new high above 3.6 million vehicles and 2-wheeler sales to 18 million vehicles in the current fiscal year ending in March 2023.
The Nikkei index closed down 1.6% to 27,777.90, the Shanghai Composite index fell 0.3% to 3,156.14, the Hang Seng index declined 0.33% and the Sensex index eased 0.7% to 62,868.50.