In the stock market, bond yields continued to rise, putting pressure on stocks after a challenging week. The S&P 500 and Nasdaq both experienced their third consecutive week of losses. However, there were some positive developments. The end of the writers’ strike boosted media companies, and Joe Biden showed support for the UAW strike against automakers.
One significant trend in the market has been the rapid climb in long-term interest rates. Bank of America noted that while there is no evidence that the increase in the 10-year Treasury yield is complete, it is reaching a stretched level. Investors are keeping an eye on upcoming economic data, including the second-quarter gross domestic product assessment and consumer-spending data and the Federal Reserve’s preferred inflation gauge.
Several stocks are worth watching, including Foot Locker, which fell 3% due to a downgrade by Jefferies. HP also lost about 2% after Berkshire Hathaway sold HP shares. Nike shares dropped 1% as Jefferies downgraded the stock, citing pressure on the wholesale channel and macro headwinds in China. Opendoor Technologies fell over 6%, impacted by the Federal Reserve’s message that high interest rates are here to stay.
Internationally, the housing crisis in China resurfaced as Evergrande shares plummeted after the company scrapped a $35 billion debt restructuring plan. European and Chinese stocks declined, while Japan’s Nikkei 225 saw marginal gains.
In the forex market, eurozone inflation figures on Friday are expected to be a major focus. Any weakness in these figures may strengthen the dollar against the euro, although a higher-than-expected number may not have a significant impact on the euro due to concerns about rising interest rates in the eurozone.
Oil futures continued their climb as speculative investors anticipate higher prices. Tightness in the physical oil market, coupled with Russia’s recent export ban on diesel and gasoline, offsets concerns raised by a hawkish Federal Open Market Committee (FOMC) meeting. Base metals slipped due to worries about demand and the global economy, compounded by a hawkish stance from the Federal Reserve, higher energy prices, and a stronger dollar.
In today’s top headlines, Hollywood writers, studios, and streamers reached a tentative agreement that would end a monthslong strike, with several victories for the writers. Perdue Farms and Tyson Foods are under federal investigation following reports of employing migrant children to clean meat-processing plants. Meta Platforms plans to release artificial intelligence chatbots with distinct personalities to attract younger users.
Sources:
– Wall Street Journal (https://www.wsj.com/)
– Joe Biden and The UAW (https://www.reuters.com/business/autos-transportation/factbox-what-you-need-know-about-uaw-strike-against-gm-2022-09-26/)
– Bank of America (https://www.bankofamerica.com/)
– Jefferies (https://www.jefferies.com/)
– Berkshire Hathaway (https://www.berkshirehathaway.com/)
– Evergrande (https://www.bloomberg.com/news/articles/2022-09-26/china-s-evergrande-tumbles-as-it-abandons-35-billion-restructure)
– Eurozone inflation figures (https://www.cnbc.com/2022/09/25/forex-market-spot-market-currencies-global-inflation-data-in-focus.html)
– Oil futures (https://www.reuters.com/business/energy/oil-prices-rise-ahead-api-us-crude-inventory-data-2022-09-27/)
– Base metals (https://www.cnbc.com/2022/09/27/metals-and-bulks-base-metals-slump-on-global-growth-worries-oil-metals-today.html)
– Hollywood writers strike (https://www.hollywoodreporter.com/business/business-news/writers-strike-deal-streamers-studios-1235235987/)
– Child labor investigation (https://www.nytimes.com/2022/09/25/business/perdue-tyson-child-labor-investigation.html)
– Meta chatbot characters (https://www.wsj.com/articles/meta-to-push-for-younger-users-with-new-ai-chatbot-characters-11664626410)
