Market Update
Market Volatility Returns, Oil Drips to New Low, Freight Rates Plunge
Barry Adams
07 Dec, 2022
New York City
Stocks on Wall Street lacked direction as investors shifted focus to weakening economic conditions abroad and rising rate worries at home.
Investors are in a holding pattern ahead of rate decisions next week from the U.S. Federal Reserve, European Central Bank and the Bank of England.
Central banks around the world slowed or halted the pace of rate hikes and policymakers are worried about the upcoming global economic slowdown.
The Bank of Canada lifted its key lending rate by 50 basis points to 4.25% and the Reserve Bank of India raised its rate at a slower pace of 35 basis points to 6.25% but the Banco Central Do Brasil left its Selic rate at 13.75%.
The central bank in Canada at its last meeting in 2022 pushed the rates to the highest level since 2008 and increased rates by 400 basis points since March.
Container Freight Rates Plunge
In another sign of a global slowdown, the Baltic Dry Index, a measure of container freight rate, plunged 90% from a year ago, reflecting the falling demand for container traffic from China to the U.S. West Coast.
Freight rates to the West Coast from China are approaching pre-pandemic levels but rates are still 32% higher for shipments from China to the U.S. East Coast ports.
Volatile Stock Market Indexes
Stock market indexes traded sideways in choppy trading and took cue from the trading in bond and energy markets.
The S&P 500 index declined 0.2% to 3,933.92 and the Nasdaq Composite index fell 0.5% to 10,958.55.
Recession Worries Depress Bond Yields
The yield on U.S. Treasuries drifted lower as rate-path worries and economic slowdown worries overshadowed elevated inflation anxieties.
The yield on 2-year Treasury notes decreased to 4.30%, 10-year Treasury notes eased to 3.47% and 30-year Treasury bonds declined to 3.47%.
Crude Oil Drops to One-year Low
Crude oil prices eased for the fourth day in a row amid global slowdown worries. The price dropped to a one-year low on demand worries from China and rising supply from the shale gas producers.
Crude oil traded near a 11-month low as investors debated the rising prospects of a global economic slowdown.
Crude oil dropped $1.72 to $72.46 a barrel and natural gas edged up 33 cents to $5.80 a thermal unit.
Mortgage Rates Ease
The average mortgage rate fell 8 basis points to 6.41% for 30-year fixed-rate mortgages for conforming loan balances with 20% down payment, the Mortgage Bankers Association said Wednesday.
U.S. Stock Movers
Lowe's announced a new $15 billion stock repurchase program with no expiration date in addition to the previous program's balance of $6.4 billion as of December 6, 2022.
Toll Brothers rose 1.6% to $46.70 after the luxury home builder said the fiscal fourth quarter sales increased 23.3% to $3.7 billion and net income rose to $640.5 million from $374.3 million or $5.63 from $3.02 a share from a year ago.
Thor Industries increased 3.5% to $87.10 after the recreation vehicle maker said net sales in the fiscal first quarter increased 21.5% to $3.11 billion and net income declined to $136.2 million from $242.2 million or $2.53 from $4.34 a year ago.
MongoDB soared 27% to $184.32 after the database developer said the fiscal third quarter revenue increased 47% to $333.6 million and net income rose to $84.8 million from $81.3 million or $1.23 from $1.22 a diluted share a year ago.
Non-GAAP net income increased to $18.7 million or $0.23 per share based on 80.4 million diluted weighted-average shares outstanding from $2.6 million or $0.03 per share in the year-ago period.
European market indexes declined for the fourth session in a row on the rising prospects of a global recession in 2023 and weak resource stocks led the decliners.
Resource stocks led the decliners on the worries that rising interest rates and ongoing inflation pressures spreading to the service sector are expected to keep consumer demand in check.
European Bond Yields at 3-month Lows
Bond yield across the eurozone and the UK dropped and German yields neared a 3-month low.
Interest rates will rise but are "very near" the neutral level, said ECB policymaker Constantinos Herodotou on Tuesday and adding to the chorus of policymakers suggesting higher rates.
The European Central Bank and the Bank of England are expected to announce rate decisions next week.
The yield on 10-year German Bunds declined to 1.77%, French bonds fell to 2.2%, the UK Gilts eased to 3.04% and Italian bonds inched lower to 3.6%.
German Industrial Production Eases
German industrial production eased 0.1%after adjusting for seasonal factors and calendar in October from the previous month, the preliminary data from Destatis showed.
In September, production rose 1.1% from the previous month.
Industrial production was unchanged in October from a year ago.
Natural Gas Based Electricity Production Rises In Germany
Germany stepped up its electricity production using coal, renewable sources and natural gas in the third quarter, a separate report from Destatis showed Wednesday.
About 36% of the electricity produced and fed into the grid in Germany in the third quarter of 2022 came from coal-fired power plants compared to 31.9% in a similar period a year ago.
Electricity production from natural gas, too, rose despite high gas prices., an increase of 4.5% from a year ago and accounted for 9.2% of the electricity compared to 8.8% a year ago.
This was the first time since the second quarter of 2021 that more electricity was produced from natural gas than in the same period a year earlier.
UK Home Price Fall Extend to Third Month
Home prices in the U.K. declined for the third month in a row in November, according to an index tracked by S&P Global, Lloyds Bank and Halifax.
Home price index dropped 2.3% on a monthly basis, the steepest decline in 14 years, and annual pace of increase slowed to 4.7% from 8.2%
Home prices fell in all regions and the average home price declined 2.3% to
Global Gloom Grips European Markets, Brent Crude Drops Below $80
Bridgette Randall
07 Dec, 2022
Frankfurt
European market indexes declined for the fourth session in a row on the rising prospects of a global recession in 2023 and weak resource stocks led the decliners.
Resource stocks led the decliners on the worries that rising interest rates and ongoing inflation pressures spreading to the service sector are expected to keep consumer demand in check.
Bond Yields
Bond yield across the eurozone and the UK dropped and German yields neared a 3-month low.
Interest rates will rise but are "very near" the neutral level, said ECB policymaker Constantinos Herodotou on Tuesday and adding to the chorus of policymakers suggesting higher rates.
The European Central Bank and the Bank of England are expected to announce rate decisions next week.
The yield on 10-year German Bunds declined to 1.77%, French bonds fell to 2.2%, the UK Gilts eased to 3.04% and Italian bonds inched lower to 3.6%.
Crude Oil Drops to 2022- Low
Crude oil traded near a 11-month low as investors debated the rising prospects of a global economic slowdown and the latest data from China's international trade added to the market gloom.
Brent crude oil declined 2.2% to $77.57 and the Dutch TTF natural gas futures rose 8% to 149.40 euros per MWh.
German Industrial Production Eases
German industrial production eased 0.1%after adjusting for seasonal factors and calendar in October from the previous month, the preliminary data from Destatis showed.
In September, production rose 1.1% from the previous month.
Industrial production was unchanged in October from a year ago.
Natural Gas Based Electricity Production Rises In Germany
Germany stepped up its electricity production using coal, renewable sources and natural gas in the third quarter, a separate report from Destatis showed Wednesday.
About 36% of the electricity produced and fed into the grid in Germany in the third quarter of 2022 came from coal-fired power plants compared to 31.9% in a similar period a year ago.
Electricity production from natural gas, too, rose despite high gas prices., an increase of 4.5% from a year ago and accounted for 9.2% of the electricity compared to 8.8% a year ago.
This was the first time since the second quarter of 2021 that more electricity was produced from natural gas than in the same period a year earlier.
UK Home Price Fall Extend to Third Month
Home prices in the U.K. declined for the third month in a row in November, according to an index tracked by S&P Global, Lloyds Bank and Halifax.
Home price index dropped 2.3% on a monthly basis, the steepest decline in 14 years, and annual pace of increase slowed to 4.7% from 8.2%
Home prices fell in all regions and the average home price declined 2.3% to
Asian Markets Down, China Trade Surplus Shrinks to 7-month Low
Arjun Pandit
07 Dec, 2022
Mumbai
Asian markets traded lower amid global recession worries and China trade data also weighed on the market sentiment.
Japanese indexes declined on the rising U.S. recession worries and Chinese indexes dropped after the international trade surplus in November fell to the level last seen in mid-2020.
Indexes in India declined for the third day after advancing for eight rates in a row on the optimism of domestic economic growth and rising consumption.
Separately, the Reserve Bank of India increased its key lending rate as expected by 35 basis points on Wednesday.
The Nikkei 225 average declined 0.3% to 27,686.40, the Shanghai Composite index dropped 0.4% to 3,199.62, the Hang Seng index plunged 3.3% to 18,814.82 and the Sensex index eased 0.3% to 62,410.68.
China's Trade Surplus Shrinks to 7-month Low
China's trade surplus fell to the smallest level since April and exports declined for the second month in a row.
China's international trade surplus shrank to $69.8 billion in November from $71.7 billion in October, exports fell 8.7% and imports declined 10.6%.
Imports fell at a faster rate on the weakening of demand after widespread Covid-restrictions cut in the mobility and economic activities.
India Lowers Key Lending Rate
The RBI lifted its key rate by 35 basis points to 6.25%, the fifth rate hike in a row following the 50 basis points increase in September. GDP growth estimate was revised lower to 6.8% from 7.0%.
Movers: Carvana, Dave & Buster's. Lowe's, MongoDB, Thor Industries, Toll Brothers
Scott Peters
07 Dec, 2022
New York City
Carvana Co plunged 43.2% to $3.83 on growing fears that the used car dealer may have to seek bankruptcy protection.
The stock collapsed in trading today after a Bloomberg report indicated that unsecured creditors, including PIMCO and Apollo Global Management signed a deal to cooperate in negotiating with the company.
However, JPMorgan analyst Rajat Gupta said in a research note to investors that the company has "enough cushion through short term revolvers" and liquidity till the end of 2023.
Dave & Buster's Entertainment Inc fell 3.9% to $34.77 despite the restaurant operator reported better-than-expected quarterly results.
Revenue in the the fiscal third quarter increased 51.3% to $481.2 million, including the acquisition of Main Event.
Net income in the quarter ending in October declined to $1.9 million from $10.6 million and diluted earnings per share fell to 4 cents from 21 cents a year ago.
Including the pro forma contribution of Main Event stores in the prior periods, total revenue increased 20.6% from a year ago and rose 32.5% from the similar pre-pandemic quarter in 2019.
Lowe's Companies Inc announced a new $15 billion stock repurchase program with no expiration date in addition to the previous program's balance of $6.4 billion as of December 6, 2022.
The company is set to present its long-term outlook with analysts and investors at 8:00 a.m. ET Wednesday.
MongoDB Inc soared 27% to $184.32 after the database developer said the fiscal third quarter revenue increased 47% to $333.6 million and net income rose to $84.8 million from $81.3 million or $1.23 from $1.22 a diluted share a year ago.
Non-GAAP net income increased to $18.7 million or $0.23 per share based on 80.4 million diluted weighted-average shares outstanding from $2.6 million or $0.03 per share in the year-ago period.
Toll Brothers Inc rose 1.6% to $46.70 after the luxury home builder said the fiscal fourth quarter sales increased 23.3% to $3.7 billion and net income rose to $640.5 million from $374.3 million or $5.63 from $3.02 a share from a year ago.
Home sales gross margin increased to 26.9% from 23.5% a year ago and Net signed contract value was $1.3 billion, down 56% and contracted homes were 1,186, down 60% from a year ago.
The company recorded a pre-tax gain of $148.4 million, or $195 million gross, after it settled with Southern California Gas Company for a gas leakage near its community located in Aliso Canyon.
The average price of a home sold increased to $951,100 from $883,100.
Thor Industries, Inc increased 3.5% to $87.10 after the recreation vehicle maker said net sales in the fiscal first quarter increased 21.5% to $3.11 billion and net income declined to $136.2 million from $242.2 million or $2.53 from $4.34 a year ago.
Recession Fears Drag Stocks and Bonds and Oil Falls to 11-month Low
Barry Adams
07 Dec, 2022
New York City
Stocks on Wall Street traded lower in early trading as investors debated future rate-hike size and the nature of the economic slowdown in 2023.
U.S. Treasury bond yields dropped and crude oil prices dropped to a 11-month low on the worries that a global recession may dampen the demand for crude oil and natural gas.
Investors are increasingly worried that the Federal Reserve may not be able to engineer soft landing while trying to lower inflation from near 8% to its preferred level of 2%.
Stock Market Indexes
The S&P 500 index declined 0.2% to 3,936.11 and the Nasdaq Composite index fell 0.5% to 11,513.24.
Bond Yields
The yield on U.S. Treasuries drifted lower as rate-path worries and economic slowdown worries overshadowed elevated inflation anxieties.
The yield on 2-year Treasury notes decreased to 4.30%, 10-year Treasury notes eased to 3.47% and 30-year Treasury bonds declined to 3.47%.
Commodities and Energy
Crude oil traded near a 11-month low as investors debated the rising prospects of a global economic slowdown.
Crude oil inched 2 cents higher to $74.11 a barrel and natural gas edged up 11 cents to $5.58 a thermal unit.
Mortgage Rates Ease
The average mortgage rate fell 8 basis points to 6.41% for 30-year fixed-rate mortgages for conforming loan balances with 20% down payment, the Mortgage Bankers Association said Wednesday.
U.S. Stock Movers
Lowe's announced a new $15 billion stock repurchase program with no expiration date in addition to the previous program's balance of $6.4 billion as of December 6, 2022.
Toll Brothers rose 1.6% to $46.70 after the luxury home builder said the fiscal fourth quarter sales increased 23.3% to $3.7 billion and net income rose to $640.5 million from $374.3 million or $5.63 from $3.02 a share from a year ago.
Thor Industries increased 3.5% to $87.10 after the recreation vehicle maker said net sales in the fiscal first quarter increased 21.5% to $3.11 billion and net income declined to $136.2 million from $242.2 million or $2.53 from $4.34 a year ago.
MongoDB soared 27% to $184.32 after the database developer said the fiscal third quarter revenue increased 47% to $333.6 million and net income rose to $84.8 million from $81.3 million or $1.23 from $1.22 a diluted share a year ago.
Non-GAAP net income increased to $18.7 million or $0.23 per share based on 80.4 million diluted weighted-average shares outstanding from $2.6 million or $0.03 per share in the year-ago period.
European Markets Extend 4-day Losses
European market indexes declined for the fourth session in a row on the rising prospects of a global recession in 2023 and weak resource stocks led the decliners.
Asian Markets Look Down
Japanese indexes declined on the rising U.S. recession worries and Chinese indexes dropped after the international trade surplus in November fell to the level last seen in mid-2020.
Indexes in India declined for the third day after advancing for eight rates in a row on the optimism of domestic economic growth and rising consumption.
Separately, the Reserve Bank of India increased its key lending rate as expected by 35 basis points on Wednesday.
The Nikkei 225 average declined 0.3% to 27,686.40, the Shanghai Composite index dropped 0.4% to 3,199.62, the Hang Seng index plunged 3.3% to 18,814.82 and the Sensex index eased 0.3% to 62,410.68.
China's International Trade Surplus Shrinks
China's international trade surplus shrank to $69.8 billion in November from $71.7 billion in October, exports fell 8.7% and imports declined 10.6%.
India Lowers Key Lending Rate
The RBI lifted its key rate by 35 basis points to 6.25%, the fifth rate hike in a row following the 50 basis points increase in September. GDP growth estimate was revised lower to 6.8% from 7.0%.