Daily global market review
The holiday-shortened trading week began on a somewhat weaker note following significant gains in the previous week. The Russell 2000 index led the losses with a decline of 2.1%, while the Nasdaq experienced a marginal 0.1% loss. Throughout most of the session, the S&P 500 remained above the 4,500 level, but a late-afternoon downturn caused it to close just slightly below that mark.
The major indices managed to limit their losses due to the relative strength of mega-cap stocks, reflecting an overall risk-averse sentiment in the market. Notably, Tesla stood out by surging almost 5.0%.
Today's market decline was driven by a rise in market interest rates, coupled with concerns about global economic growth stemming from disappointing overseas Purchasing Managers' Index (PMI) readings and increasing oil prices. The 2-year Treasury note yield increased by eight basis points to 4.96%, while the 10-year note yield rose by ten basis points to 4.27%.
The significant surge in oil prices contributed to the lackluster market performance, raising worries about inflation expectations and potential pressure on consumer spending. WTI crude oil futures increased by 1.2% to $86.55 per barrel following news that Saudi Arabia and Russia intend to extend their voluntary oil production cuts of 1 million barrels per day and 300,000 barrels per day, respectively, through the end of 2023.
This rise in oil prices propelled the S&P 500 energy sector (+0.5%) to the top of the performance list, followed by the information technology sector (+0.4%). Nine out of the 11 S&P 500 sectors recorded declines, with materials (-1.8%) and industrials (-1.7%) leading the losses.
Notably, homebuilder stocks showed weakness due to concerns about increasing mortgage rates. The SPDR S&P Homebuilder ETF (XHB) fell by 3.9%, while the iShares U.S. Home Construction ETF (ITB) declined by 4.6%. Companies like Toll Brothers and Pulte Group were among the leading decliners in this sector.
Amidst the market movements, there was some positive news as well. Goldman Sachs revised its estimate of the U.S. experiencing a recession, lowering it from 20% to 15%. Additionally, Fed Governor Waller, a member of the Federal Open Market Committee (FOMC), indicated that there was no immediate need for the Fed to change its current policy rate based on last week's data.
Year-to-date performance for key indices is as follows: Nasdaq Composite +34.0%, S&P 500 +17.1%, S&P Midcap 400 +7.4%, Russell 2000 +6.8%, and Dow Jones Industrial Average +4.5%.
In terms of economic data, the day featured factory orders for July, which decreased by 2.1% month-over-month, slightly beating the consensus forecast of -2.4%. Excluding transportation, factory orders increased by 0.8% month-over-month, following a 0.3% increase in June. Shipments of manufactured goods also rose by 0.5% month-over-month, building on a 0.2% increase in June. The key takeaway from the report is that factory orders appeared stronger in July when excluding the volatile transportation component.
The 10-year Treasury Note experienced a decline of 28/32 points, pushing the yield to 4.26%. On the New York Stock Exchange (NYSE), there were 601 advancing and 2,289 declining stocks, with a trading volume of 835 million shares. In contrast, the Nasdaq saw 1,345 stocks advancing and 3,030 declining, with a notable trading volume of 4.3 billion shares.
In terms of industry performance, strength was observed in the energy, information technology, and communication services sectors, while weakness prevailed in the utilities, industrials, materials, real estate, and financials sectors.
Several factors influenced the market today. The recovery of some mega-cap stocks from early losses contributed to an improvement in overall index performance. Additionally, rising market interest rates were a notable factor. Furthermore, oil prices experienced a significant surge following Saudi Arabia's announcement of an extension of voluntary oil production cuts of one million barrels per day for three more months, now including October until the end of December 2023. These developments were set against a backdrop of global growth concerns fueled by disappointing Purchasing Managers' Index (PMI) readings from overseas.
In the United States, stock indices experienced varying changes: the Dow declined by 195.74 points, reflecting a 0.56% decrease; the S&P 500 decreased by 18.94 points, indicating a 0.42% drop; and the NASDAQ saw a minor decrease of 10.86 points, representing a 0.08% decline. Meanwhile, the VIX in the United States increased by 0.92 points, signifying a 7.03% rise. The Russell 2000 showed a significant decline of 40.38 points, marking a 2.10% decrease. In Canada, the S&P/TSX Composite dropped by 131.60 points, demonstrating a 0.64% decline, while the S&P/TSX 60 also declined by 8.41 points, reflecting a 0.68% decrease. In Brazil, the BOVESPA index experienced a minor drop of 445.32 points, showing a 0.38% decrease. In Chile, the S&P IPSA index decreased by 62.31 points, signifying a 1.04% decline, and in Mexico, the S&P/BMV IPC index saw a decrease of 98.02 points, indicating a 0.18% drop.
In Europe, the STOXX Europe 50 index experienced a minor decrease of 3.34 points, reflecting a 0.08% drop, while the STOXX Europe 600 showed a slight decline of 1.06 points, marking a 0.23% decrease. In the United Kingdom, the FTSE 100 index declined by 14.83 points, demonstrating a 0.20% drop, while in Italy, the FTSE MIB index increased by 4.85 points, signifying a 0.02% rise. In France, the CAC 40 index saw a decrease of 24.79 points, marking a 0.34% drop.
In Asia, the Nikkei 225 index in Japan increased by 97.58 points, reflecting a 0.30% rise, while the Hang Seng index in Hong Kong declined by 387.25 points, indicating a 2.06% drop. The Shanghai Composite index in China saw a decrease of 22.69 points, signifying a 0.71% decline, and in Australia, the S&P/ASX 200 index dropped by 4.50 points, demonstrating a 0.06% decrease. In South Korea, the KOSPI index declined by 2.37 points, marking a 0.09% drop, while the Taiwan SE index in Taiwan increased by 1.92 points, signifying a 0.01% rise.
In India, the BSE MidCap index closed at 32,081.77 with a high of 32,100.68 and a low of 31,815.89, representing a positive change of +1.09%, or +345.71 points. Similarly, the BSE Sensex closed at 65,780.26, reaching a high of 65,831.70 and a low of 65,601.47, resulting in a modest gain of +0.23%, or +152.12 points. The BSE SmallCap index closed at 37,964.55, with its high and low values at 38,134.44 and 37,837.89, respectively, reflecting a gain of +0.61%, or +230.41 points. Among other notable indices, the NIFTY Midcap 100 experienced a significant increase of +1.06%, or +423.25 points, closing at 40,253.60. Conversely, the Nifty 50 USD index decreased by -0.11%, or -9.20 points, closing at 8,168.25.
In the world of cryptocurrencies, the Nasdaq Crypto Index increased by 3.14 points, reflecting a 0.21% rise, while Bitcoin saw a minor decrease of 88.00 points, indicating a 0.34% drop. Ether increased slightly by 1.00 point, signifying a 0.06% rise, while Litecoin experienced a drop of 0.67 points, marking a 1.05% decrease. XRP showed a minor decline of 0.00 points, representing a 0.66% drop.
In the realm of bonds and rates, various Treasury yields experienced changes: the 3 Month Treasury yield decreased slightly by 0.023 points, while the 2 Year Treasury yield increased by 0.079 points. The 5 Year Treasury yield saw an increase of 0.074 points, and the 10 Year Treasury yield rose by 0.026 points. The 30 Year Treasury yield also increased, rising by 0.028 points.
In the currency market, exchange rates exhibited minor changes: the Euro/US Dollar rate remained relatively stable, with a 0.01% change. Similarly, the British Pound/US Dollar rate showed a minor 0.01% change, while the US Dollar/Canadian Dollar rate increased by 0.02%. The US Dollar/Swiss Franc rate remained stable, with a 0.02% change, and the US Dollar/Japanese Yen rate remained virtually unchanged, showing a negligible change.
In the commodity market, various indices and energy prices displayed mixed movements. The Bloomberg Commodity index saw a slight decrease of 0.02%, while the UBS Bloomberg CMCI index showed a modest gain of 0.42%. The Reuters/Jefferies CRB index increased by 0.26%, and the Rogers International index inched up by 0.07%.
Regarding energy prices, WTI Crude Oil on the Nymex increased by 1.33% to reach $86.69 per barrel for the October 2023 contract, while Brent Crude on ICE rose by 1.18% to $90.05 per barrel for the November 2023 contract. RBOB Gasoline on Nymex decreased by 0.39% to $258.10 per gallon for the October 2023 contract. However, Natural Gas on Nymex exhibited a significant decline of 6.62% to $2.58 per MMBtu for the October 2023 contract. Heating Oil on Nymex increased notably by 3.69% to $321.96 per gallon for the October 2023 contract.
In the precious and industrial metals category, Gold on Comex decreased by 0.74% to $1,952.60 per troy ounce for the December 2023 contract, while Gold Spot declined by 0.85% to $1,926.12 per troy ounce. Silver on Comex showed a substantial drop of 2.81% to $23.87 per troy ounce for the December 2023 contract. Copper on Comex decreased marginally by 0.09% to $384.85 per pound for the December 2023 contract. Platinum Spot declined by 0.12% to $930.80 per troy ounce.
In the agriculture sector, Corn on CBOT increased by 0.93% to reach $486.00 per bushel for the December 2023 contract, while Wheat on CBOT showed a gain of 0.63% at $599.25 per bushel for the December 2023 contract. Cocoa on ICE exhibited a rise of 1.22% to $3,649.00 per metric ton for the December 2023 contract. Cotton #2 on ICE declined by 1.32% to $88.76 per pound for the December 2023 contract, and Live Cattle on CME decreased by 0.11% to $179.95 per pound for the October 2023 contract.
Tomorrow's economic data releases include the MBA Mortgage Applications, comprising the Composite Index, the Refinance Index, and the Purchase Index. These figures are expected to be disclosed at 7:00 AM ET. At 8:30 AM ET, the International Trade in Goods and Services data will be released. Following that, at 9:45 AM ET, the PMI Composite Final will reveal the Services Index and the Composite Index. Lastly, at 10:00 AM ET, the ISM Services Index, a medium-impact event, is set to be unveiled.