- Barry Adams
- 03 Nov, 2022
- New York City
Stocks on Wall Street turned lower and bond yields surged after the Federal Reserve lifted its key lending rate and reiterated its aggressive stance on inflation.
The yield on 2-year Treasury bonds surged to a high not seen since 2007 after the Fed Chairman Powell reiterated the central bank's hawkish stance against inflation.
The yield on 2-year Treasury notes rose to 4.71%, 10-year Treasury notes jumped to 4.15%, and 30-year bonds inched higher to 4.19%.
Tech stocks led the decliners on the worries that the rate tightening cycle will reduce the value of future profits.
Amazon, Alphabet, Apple, Meta and Microsoft dropped between 2% and 4%. Meta, the parent of Facebook, has plunged 73% in the year so far, the worst performer in the S&P 500 index.
The S&P 500 index decreased 1.1% to 3,719.89 and the Nasdaq Composite index dropped 1.7% to 10,342.94.
Crude oil declined $1.85 to $88.14 a barrel and natural gas fell 36 cents to $5.90 a thermal unit.
After the close, Starbucks reported revenue in the fiscal fourth quarter ending on October 2 increased 3% to a record $8.41 billion from $8.14 billion a year ago.
In the quarter, net income dropped to $878 million from $1.76 billion and diluted earnings per share declined to 76 cents from $1.49 a year ago.
Comparable store sales growth slowed to 11% from 22% a year ago and the sales were driven by 1% increase in transaction and 10% growth in ticket size.
U.S. Trade Deficit Grows in September
The U.S. trade gap enlarged to $73.3 billion in September from a downwardly revised $65.7 billion deficit in August. The trade deficit rose to a 3-month high.
The goods trade deficit increased by $6.6 billion to $92.7 billion and the service surplus declined $1.0 billion to $19.5 billion.
Total imports increased 1.5% to $331.3 billion and exports fell 1.1% to $258 billion.
European Markets Fall, UK and Norway Lift Rates, Swiss Inflation Eases
Market indexes in Europe also turned lower and the Bank of England lifted its key lending rate.
The central bank revised higher its lending rate by 75 basis points, the largest rate increase in 33 years, to 3.0%.
The Norwegian central bank lifted its key lending rate by 25 basis points to 2.5%.
The Monetary and Financial Policy Committee revised its rate higher in an unanimous decision, according to the statement released by the Norges Bank Thursday.
The central bank also hinted rates are likely to continue to go higher as consumer price inflation in September rose to a 34-year high to 6.9% from 6.5% in August.
Bond yield rose following the global bond market sell-off after the U.S. rate hike.
The yield rose on 10-year German bunds to 2.24%, French bonds to 2.73%, the UK bonds to 3.48% and Italian bonds to 4.42%.
The DAX index declined 1% to 13,130.19, the CAC-40 index dropped 0.5% to 6,243.28 and the FTSE 100 index jumped 0.6% to 7,188.63.
The benchmark Swiss Market Index fell 95.64 points or 0.89% to 10,710.59 despite the larger-than-expected decline in inflation.
Consumer price inflation in October fell to an annual rate of 3.0% from 3.3% pace in September, the Federal Statistics Office reported Thursday.
The annual inflation rate was the lowest since May, but still above the 2% target set by the Swiss National Bank.
AXA Group gained 1% after the French insurance group reported revenue in nine-month period increased to 78.4 billion euros and the company estimated preliminary gross claims and net of reinsurance of 0.4 billion euros of claims arising from Hurricane Ian,
BMW fell 3% despite the German automaker reiterated its fiscal 2022 annual outlook.
Solvay SA declined 0.4% after the Belgian chemical maker announced a joint venture with Mexico-based Orbia to manufacture battery materials in the United States.
A week ago, Solvay lifted its fiscal 2022 organic operating earnings growth estimate to 28% from a year ago from the previous estimate range between 14% and 18% announced in July.
Asian Markets Drop, China Service Sector Contracts
Markets in Asia reacted to the latest rate hike in the U.S. and Hong Kong Monetary Authority lifted its rate by 75 basis points to keep pace with the Federal Reserve and maintain the fixed-exchange rate.
Markets in Japan were closed to celebrate Culture Day holiday and the Kospi index in Seoul fell 0.3% to 2,329.17.
The Hang Seng Index plunged 3.1% to 15,339.49 after a private survey showed service sector contracted at a faster-than-anticipated pace in October.
The Shanghai Index declined 0.2% to 2,997.81 after China imposed more and tighter restrictions in several cities to fight rising cases of coronavirus infections.
The Sensex index in Mumbai eased 0.1% to 60,836.41 and investors reacted positively to the latest batch of corporate earnings. Service sector also maintained its growth rate in October according to a private survey.
The ASX 200 fell 128.80 points or 1.84% to 6,857.90 and the broader All Ordinaries index declined 1.77% to 7,050.60 following the rate hike in the U.S.
- Bridgette Randall
- 03 Nov, 2022
- New York City
- Bridgette Randall
- 03 Nov, 2022
- Frankfurt
Market indexes in Europe also turned lower and the Bank of England lifted its key lending rate.
The central bank revised higher its lending rate by 75 basis points, the largest rate increase in 33 years, to 3.0%.
The Norwegian central bank lifted its key lending rate by 25 basis points to 2.5%.
The Monetary and Financial Policy Committee revised its rate higher in an unanimous decision, according to the statement released by the Norges Bank Thursday.
The central bank also hinted rates are likely to continue to go higher as consumer price inflation in September rose to a 34-year high to 6.9% from 6.5% in August.
Bond yield rose following the global bond market sell-off after the U.S. rate hike.
The yield rose on 10-year German bunds to 2.24%, French bonds to 2.73%, the UK bonds to 3.48% and Italian bonds to 4.42%.
The DAX index declined 1% to 13,130.19, the CAC-40 index dropped 0.5% to 6,243.28 and the FTSE 100 index jumped 0.6% to 7,188.63.
The benchmark Swiss Market Index fell 95.64 points or 0.89% to 10,710.59 despite the larger-than-expected decline in inflation.
Consumer price inflation in October fell to an annual rate of 3.0% from 3.3% pace in September, the Federal Statistics Office reported Thursday.
The annual inflation rate was the lowest since May, but still above the 2% target set by the Swiss National Bank.
AXA Group gained 1% after the French insurance group reported revenue in nine-month period increased to 78.4 billion euros and the company estimated preliminary gross claims and net of reinsurance of 0.4 billion euros of claims arising from Hurricane Ian,
BMW fell 3% despite the German automaker reiterated its fiscal 2022 annual outlook.
Solvay SA declined 0.4% after the Belgian chemical maker announced a joint venture with Mexico-based Orbia to manufacture battery materials in the United States.
A week ago, Solvay lifted its fiscal 2022 organic operating earnings growth estimate to 28% from a year ago from the previous estimate range between 14% and 18% announced in July.
- Brian Turner
- 03 Nov, 2022
- New York City
The U.S. trade gap enlarged to $73.3 billion in September from a downwardly revised $65.7 billion deficit in August. The trade deficit rose to a 3-month high.
The goods trade deficit increased by $6.6 billion to $92.7 billion and the service surplus declined $1.0 billion to $19.5 billion.
Total imports increased 1.5% to $331.3 billion and exports fell 1.1% to $258 billion.
In the year so far, the goods and services deficit increased 20.2% to $125.6 billion from a year ago.
Exports jumped 20.2% to $378.1 billion and Imports increased by the same amount to $503.6 billion.
- Barry Adams
- 03 Nov, 2022
- New York City
Stocks on Wall Street turned lower and bond yields surged after the Federal Reserve lifted its key lending rate and also clarified the direction of future rate path.
The yield on 2-year Treasury bonds surged to 4.7%, a high not seen since 2007 after the Fed Chairman Powell reiterated the central bank's hawkish stance against inflation.
The yield on 2-year Treasury notes rose to 4.70%, 10-year Treasury notes jumped to 4.14%, and 30-year bonds inched higher to 4.15%.
Tech stocks led the decliners on the worries that the rate tightening cycle will reduce the value of future profits.
Amazon, Alphabet, Apple, Meta, Microsoft and Tesla dropped between 2% and 4%.
The S&P 500 index decreased 0.8% to 3,729.44 and the Nasdaq Composite index declined 1.2% to 10,391.99.
Crude oil declined $1.33 to $88.68 a barrel and natural gas fell 15 cents to $6.10 a thermal unit.
The U.S. trade gap enlarged to $73.3 billion in September from a downwardly revised $65.7 billion deficit in August. The trade deficit rose to a 3-month high.
The goods trade deficit increased by $6.6 billion to $92.7 billion and the service surplus declined $1.0 billion to $19.5 billion.
Total imports increased 1.5% to $331.3 billion and exports fell 1.1% to $258 billion.
Market indexes in Europe also turned lower and the Bank of England lifted its key lending rate.
The central bank revised higher its lending rate by 75 basis points, the largest rate increase in 33 years, to 3.0%.
Bond yield rose following the global bond market sell-off after the U.S. rate hike.
The yield rose on 10-year German bunds to 2.24%, French bonds to 2.73%, the UK bonds to 3.48% and Italian bonds to 4.42%.
- Brian Turner
- 03 Oct, 2022
- New York City
- Brian Turner
- 03 Nov, 2022
- New York City
- Barry Adams
- 02 Nov, 2022
- New York City
Benchmark indexes in volatile trading fell sharply and reversed intraday gains after the Fed raised its key lending rate.
Stocks soared and erased gains of the session immediately after the release of the Fed's statement that many traders interpreted as Fed laying the groundwork for slower rate hikes in the future.
Hopes of slower rate hikes were dashed after Fed Chairman Jerome Powell reiterated his views on inflation.
- Brian Turner
- 02 Nov, 2022
- New York City
The Federal Reserve lifted its key lending rate range by 75 basis points as widely expected.
In an unanimous decision, the committee voted to lift the fed funds rate range to 3.25% to 4%.
The central bank lifted its target range for the sixth time in a row and lifted rates by 75 basis points for the fourth time in a row.
The new fed funds rate range is the highest since 2008.
Investors looking for any future rate path increase clues were disappointed after the language in the policy statement did not provide additional insights.
The statement released after the policymakers meeting reiterated the Fed's commitment in lowering inflation to its target range of 2%.
The accompanied statement left a door open for the Fed to lift rate at a slower pace if needed
"In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments," the Fed's announcement noted.
The Fed's statement also confirmed it is on track to reduce Treasury Securities holdings as announced in May.
Despite the multiple rate hikes, inflation has remained stubbornly high and is well anchored in the economy.
The Fed's preferred measure of inflation jumped 6.2% in September and advanced 5.1% excluding food and energy.
GDP declined in the first two quarters of 2022 but rebounded at 2.6% annual rate in the third quarter, driven by higher exports.
- Scott Peters
- 02 Nov, 2022
- New York City
Airbnb declined 8.3% to $100.01 after the online accommodation booking platform reported better-than-expected quarterly results.
Revenue in the third quarter jumped 29% to $2.9 billion and net income soared 46% to $1.2 billion.
The company said gross booking jumped 31% to $15.6 billion on higher average daily rate and an increase in nights booked.
Nights and experiences booked rose 25% to 99.7 million from a year ago, driven by all regions but cancellation rates rose to the pre-pandemic 2019 levels.
Advanced Micro Devices jumped 3.5% to $61.74 after the semiconductor chip maker reported better-than-expected quarterly results.
Revenue in the third quarter increased 29% to $5.6 billion from $4.3 billion a year ago.
Net income plunged 93% to $66 million from $923 million and diluted earnings per share dropped to 4 cents from 75 cents a year ago.
- Brian Turner
- 02 Nov, 2022
- New York City
Private sector payrolls expanded in October, reflecting labor market strength, according to the ADP survey.
Companies added 239,000 jobs in October from the revised 192,000 positions in September.
overall wages rose 7.7% in October from a year ago but fell 0.1% from the previous month.
Service sector jobs increased 247,000 but goods producing companies trimmed 8,000 jobs in October. Hospitality, travel and entertainment companies led the increase with 210,000 additions.
- Bridgette Randall
- 02 Nov, 2022
- Frankfurt
European markets traded down as cautious investors awaited the U.S. Federal Reserve's rate decision and comments on the economy.
The DAX index declined 0.3% to 13,297.24, the CAC-40 index fell 0.6% to6,289.41 and the FTSE 100 index dropped 0.5% to 7,147.99.
Brent crude oil eased 29 cents to $94.36 a barrel and Dutch TTF natural prices rose 6.5% to 123.80 euros a MWh.
The euro edged lower to 98.78 U.S. cents and the British pound traded near $1.156.
The yield on 10-year German Bunds declined to 2.11%, French bonds eased to 2.65%, U.K. bonds to 3.41% and Italian bonds to 4.27%.
Germany's Exports and Imports Decline
Germany's exports declined in September by 0.5% from the previous month and imports fell 2.9%. The decline in exports and imports was not expected.
Exports fell for the first time in eight months after rising 2.9% and imports advancing 4.9% in August, Destatis reported Wednesday.
Trade surplus in September increased to 3.7 billion euros from 1.2 billion euros in August.
On an annual basis, exports rose at a slower pace of 20.3% in September from 23.1% in August and imports eased to 30.7% in September from 37.6% in August.
Eurozone Manufacturing Shrank In October
The eurozone manufacturing activities shrank for the fourth month in a row in October, S&P Global survey showed Wednesday.
The manufacturing Purchasing Managers' Index fell to 46.4 in October from 48.4 in the previous month.
- Barry Adams
- 02 Nov, 2022
- New York City
Stocks on Wall Street edged lower ahead of the rate decision later in the day and bond yields held steady.
The Federal Reserve is widely expected to lift rates by 75 basis points, the fourth large-sized increase in a row. Investors are looking for more clues on the health of the economy and future rate direction.
Global markets were on hold ahead of the Fed' move and the yen jumped after the Bank of Japan hinted at a policy shift.
The slow depreciation of the yen has been worrying the Bank of Japan and finance ministry as higher import bills fuel inflation.
Japan spent $43 billion between September 29 and October 27 in arresting a rapid decline in the yen, Japan's Finance Minister Shunichi Suzuki said Wednesday.
Despite the foreign exchange market intervention, the yen has declined because of the Bank of Japan's ultra-low interest rate policy, diverging from the rate increase policy of the U.S. Federal Reserve.
The S&P 500 index declined 0.6% to 3,831.47 and the Nasdaq Composite index dropped 0.7% to 10,814.46.
Crude oil declined 30 cents to $88.02 a barrel and natural gas rose 33 cents to $6.06 a thermal unit.
The yield on 2-year Treasury notes held at 4.54%, 10-year Treasury notes was unchanged at 4.04% and 30-year bonds traded down at 4.10%.
Service Sector Drives Private Sector Job Growth In October
Private sector payrolls expanded in October, reflecting labor market strength, according to the ADP survey.
Companies added 239,000 jobs in October from the revised 192,000 positions in September.
overall wages rose 7.7% in October from a year ago but fell 0.1% from the previous month.
Service sector jobs increased 247,000 but goods producing companies trimmed 8,000 jobs in October. Hospitality, travel and entertainment companies led the increase with 210,000 additions.
U.S. Stock Movers
Airbnb declined 8.3% to $100.01 after the online accommodation booking platform reported better-than-expected quarterly results.
Revenue in the third quarter jumped 29% to $2.9 billion and net income soared 46% to $1.2 billion.
The company said gross booking jumped 31% to $15.6 billion on higher average daily rate and an increase in nights booked.
Nights and experiences booked rose 25% to 99.7 million from a year ago, driven by all regions but cancellation rates rose to the pre-pandemic 2019 levels.
Advanced Micro Devices jumped 3.5% to $61.74 after the semiconductor chip maker reported better-than-expected quarterly results.
Revenue in the third quarter increased 29% to $5.6 billion from $4.3 billion a year ago.
Net income plunged 93% to $66 million from $923 million and diluted earnings per share dropped to 4 cents from 75 cents a year ago.
- Scott Peters
- 01 Nov, 2022
- New York City
Airbnb declined 5% after the online accommodation booking platform reported better-than-expected quarterly results.
Revenue in the third quarter jumped 29% to $2.9 billion and net income soared 46% to $1.2 billion.
The company said gross booking jumped 31% to $15.6 billion on higher average daily rate and an increase in nights booked.
Nights and experiences booked rose 25% to 99.7 million from a year ago, driven by all regions but cancellation rates rose to the pre-pandemic 2019 levels.
Advanced Micro Devices jumped 4% after the semiconductor chip maker reported better-than-expected quarterly results.
Revenue in the third quarter increased 29% to $5.6 billion from $4.3 billion a year ago.
Net income plunged 93% to $66 million from $923 million and diluted earnings per share dropped to 4 cents from 75 cents a year ago.
- Barry Adams
- 01 Nov, 2022
- New York City
Stocks were under pressure after the release of the latest labor market survey and manufacturing survey.
Investors are anticipating the Federal Reserve to lift rates and guide the future rate hike direction.
Financial markets have been roiled by the future rate path and the looming recession worries and the Fed's quantitative tightening plans.
Despite the Fed's five rate hikes in 2022 and initiating a plan to sell Treasury securities, inflation has remained above 8% and nowhere near the Fed's target range of 2%.
The strong jobs report provided yet another signal to policymakers and forces fueling inflation.
Job Openings Rose in September
Job openings in September rose to 10.72 million from the revised 10.21 million in August and from 10.67 million a year ago, according to the latest Job Openings and Labor Turnover Survey released by the Bureau of Labor Statistics.
The largest job openings were in accommodation and food services and in health care and social assistance.
The closely watched jobs report is not likely to prevent the Fed's policy makers from lifting the key lending rate by 75 basis points at the end of the rate decision meeting tomorrow.
Factory Orders Growth Cools
Another report showed manufacturing expansion cooled to the slowest pace to 50.2 in October from 50.9 in September.
The ISM Purchasing Managers Index for manufacturing dropped to the lowest level since the contraction in May 2020.
The 50-mark line separates growth from contraction.
Stocks Lack Direction, Yields Inch Higher
Stocks were under pressure and closed down ahead of the rate decision tomorrow.
Bond yield traded sideways and stocks lacked direction on the worries that the Fed may not back off from its hawkish rhetoric.
The S&P 500 index declined 0.4% to 3,856.10 and the Nasdaq Composite index fell 0.9% to 10,890.85.
Crude oil rose $1.83 to $88.33 a barrel and natural gas increased 53 cents to $5.82 a thermal unit.
The yield on 2-year Treasury notes inched higher to 4.55%, 10-year Treasury notes to 4.04% and 30-year bonds to 4.10%.
Movers: Avis, Goodyear, Uber
Avis Budget declined more than 7% despite the rental car company reporting earnings ahead of expectations driven by the resurgent travel demand.
Uber Technologies Inc soared 13% after the company reported better-than-anticipated earnings and estimated fourth quarter adjusted earnings ahead of expectations.
Goodyear Tire & Rubber Co dropped 13% after the company reported weaker-than-anticipated earnings on rising product costs and negatively impacted by the surging dollar.
European Markets UP, Germany's Import Inflation Eases
European markets closed up as investors digested a fresh batch of earnings and economic news in the region.
Germany's import price inflation cooled in September to 29.8% from 32,7% in August, according to the latest data released by Destatis Tuesday.
UK manufacturing activities fell at the fastest pace in more than two years in October, according to the data released from S&P Global Tuesday.
The Chartered Institute of Procurement & Supply factory Purchasing Managers' Index decreased to 46.2 in October from 48.4 in September.
The DAX index increased 0.6% to 13,338.74, the CAC-40 index rose 1% to 6,328.25 and the FTSE 100 index added 1.3% to 7,186.16.
Brent crude increased $1.88 to $94.69 a barrel and TTF natural gas prices fell to 116.19 euros a MWh.
The euro edged down to 98.81 U.S. cents and the British pound to $1.14.
Europe Stock Movers
Diageo Plc gained 0.4% after the company said it is starting its stock repurchase program's fourth and final phase.
The company intends to purchase