EZBites~week ending September 29, 2023
LAST WEEK:
DOW:-1.3% (YTD:+1.1%)
NASDAQ: +0.01% (YTD:+26.3%)
S&P: -0.7% (YTD:+11.7%)
The stock market ended mixed at the index level.? Some rebound attempts throughout the week left the Nasdaq (and Russell 2000) with slim gains while the DJIA and S&P 500 declined 1.3% and 0.7%, respectively.? This had been a belief that the stock market was due for a bounce after suffering steep September losses, but rising long-term rates have so far kept stocks in check.
The 10-yr note yield jumped 13 basis points this week, and 48 basis points this month, ending at 4.57%. The 2-yr note yield declined eight basis points this week, rising a total of 18 basis points in September, to 5.04%.
The concern for investors is the unabating pace at which rates are moving.? In addition, the recent rate rise doesn't appear to be tied to a fear of more rate hikes by the Fed.? In fact, rate hike expectations are declining-- as the Fed Funds futures market now sees only a 14.2% probability of a rate hike at the November FOMC meeting, versus 27.5% a week ago and 62.3% a month ago, according to the CME FedWatch Tool.
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That understanding creates angst about what else is driving the Treasury market -- other factors include: the Fed having a long way to go still with its QT efforts, other central banks possibly selling Treasuries in a bid to support their own currencies, and budget deficit concerns.??In addition to the move in interest rates, seasonality was cited as another potential factor weighing over the market, because September historically has been the worst month of the year for the S&P 500.
Investors received some economic data this week, including a weaker than expected August new home sales report, a low level of weekly jobless claims, and some pleasing inflation data in the form of the core-PCE Price Index for August.
WTI crude oil futures jumped more than $7.00/bbl this month, which stoked lingering concerns about inflation expectations, rising gas prices, and a slowdown in consumer spending.
The rate-sensitive S&P 500 Utilities sector saw the largest decline this week by a decent margin, falling 7.0%. The next worst performer was the Consumer Staples sector (-2.1%).? The only positive sectors this week were Energy (+1.3%) and Materials (+0.2%).
Our October EZTracker Newsletters was published Sunday, September 24, 2023