Sep 29, 2022 29, 2022 at 6:03 PM
VOT Research Desk
Key Insights – U.S Morning Rundown
After a brief respite during the previous session that was prompted by the Bank of England’s decision to begin buying bonds, U.S. stock futures plunged on Thursday morning as recession fears returned to Wall Street.
In the early trade, futures on the Dow Jones Industrial lost 250 points, or about 0.9%, while those on the S&P 500 fell 1.1%.Contracts on the Nasdaq Composite, which is focused on technology, plunged 1.4%.
Max Full screen On the economic data front, the Labor Department announced on Thursday that initial jobless claims fell to 193,000 in the week ended September 24 from a downwardly revised 213,000 the week before.
This was the lowest number of claims since April. Bloomberg’s consensus estimates indicated that economists expected 215,000 claims.
In corporate news, CarMax (KMX) reported second-quarter earnings that missed Wall Street estimates and cited “affordability challenges” that weighed on sales, which caused the company’s shares to fall 15% before the market.
Despite a larger quarterly loss, Bed Bath & Beyond (BBBY) stock rose on Thursday due to persistent merchandising and inventory issues as well as inflationary pressures. Before the market opened, shares rose 4%.
After the English central bank announced on Wednesday that it would resume bond purchases to assist in stabilizing financial and currency markets, the renewed risk-off mood puts all three major averages on track to lose gains. Investors were pleased with the officials’ recent shift away from aggressive policy tightening. The S&P 500, Dow, and Nasdaq all went up by about 2%.
Excessive and disorderly tightening of financial conditions” could occur “in the absence of proper policy coordination along with the speed and synchronization of rate hikes.
In the UK, the economic outlook has recently taken a turn for the worse with the release of Prime Minister Liz Truss’s budget leading to a market rout, with treasury yields surging to their highest level since 2010 and the British pound plunging to its lowest level in 37 years.The British pound plunging to its lowest level in 37 years.
British 30-year bond yields fell 100 basis points after touching a two-decade high following the Bank of England’s intervention on Wednesday, which involved the purchase of approximately 65 billion pounds, or approximately $69 million, of long-dated gilts.
After rising and then falling at the fastest rate in decades, Treasury yields in the United States pushed higher on
Thursday, in the midst of the worst bond sell-off since 1949, the benchmark 10-year Treasury note, a crucial economic benchmark, briefly reached 4% on Wednesday.
Raphael Bostic, president of the Atlanta Fed, said on Wednesday that his views on U.S. Federal Reserve policy did not change or stoke fears that England’s economic woes could spill over. “We would expect growth to be below trend, we would start to see demand for a wider range of products start to soften, and we would start to see labor markets start to be more rationalized,” Bostic said, adding that officials may consider stopping and holding at that level if job openings
