Oct 4, 2022
VOT Research Desk
Key Insights and Analysis
Lower US Treasury yields and a weaker USD ISM PMI
Manufacturing activity bring the S&P 500, Dow, and Nasdaq 100 all higher.
Prices also soften All eyes will be on the JOLTS job openings report tomorrow.
The main US indices rose today after the release of weaker-than-expected Manufacturing activity, following a negative end to September and Q3 for stocks as a result of worries about a global economic slowdown brought on by tighter financial conditions. Given the rate of Fed rate hikes, the scenario in which bad news is good news appears to be having an effect. The US dollar appreciates, equities breathe a sigh of relief, and expectations for FOMC hawkishness decrease as a result of weaker Economic Calendar news.
The Dow, S&P 500, and Nasdaq100 all experienced declines in September of 8.8 percent, 9.3 percent, and 10.5 percent, respectively, which resulted in a loss of 6.6%, 5.28 percent, and 4.11 percent in the third quarter. The decline in the US indices is due to price pressure and rising interest rates. The 10-year Treasury yield reached a level not seen in more than a decade just this past week, which was 4.0%.
However, yields were able to retract further today thanks to weaker-than-anticipated ISM manufacturing PMI data indicating that the sector’s activity is close to contraction territory. Investors were prompted to take a step back as a result of the price paid component’s decline at the same time, prompting them to wonder if the FOMC’s rate hikes are now having an impact on the economy and if this is the kind of scenario the Fed would like to see in order to slow the pace of the tightening cycle.
The S&P 500 and the Dow both posted gains of 2.59 percent and 2.67 percent at the close. Energy led the S&P 500’s upward movement, which included all sectors. The WTI contract was at $83.37 at the time of writing when prices for crude oil increased by more than 4.87 percent. The markets anticipate a supply cut of one million barrels per day as a response to falling prices at the OPEC+ meeting on October 5.Since 2020, this would be the largest reduction.
In a similar vein, the Nasdaq 100 also rallied and finished with a gain of 2.36 percent, despite the fact that Tesla lost more than 8 percent on news that the electric vehicle manufacturer missed sales in the third quarter.
October is typically a bullish month from a technical standpoint, with more volatility and volume. The positive kick-start has been confirmed by the S&P 500 today. The index has closed above 3660 since reaching its low point in November 2020.If the bulls are successful in maintaining this level, the next move could be toward 3880 and the 3723 region, which serves as a major resistance zone. On the other hand, 3541 may follow if 3571 is broken.
