Major Averages Rebound After Week of Losses, Lithium Climbs Higher

Barry Adams
28 Sep, 2022
New York City

Tech stocks led the rebound on Wall Street and major averages snapped 6-day losing streak. 

The U.S. dollar continued its advance against all major currencies and the euro dropped to a new record 2-decade low and the British pound fell to a new 4-decade low. 

Energy and tech stocks led the gainers after crude oil rebounded from 9-month low and bond yields edged lower. 

The S&P 500 index increased 1.97% to 3,719.04 and the Nasdaq Composite index jumped 2.05% to 11,051.65. 

Bond market retreated from its recent highs after rising sharply in the last six sessions in a row. 

Investors also noticed the strength of the U.S. dollar, lifting the hopes that the Federal Reserve may be forced to pause before resuming its advertised rate hikes. 

 

Bond Yields Turn Lower  

U.S. Treasury 10-year bond yield turned lower after rising as high as 4%, the level not seen since 2008. 

The yield on 2-year Treasury notes declined to 4.12%, 10-year Treasury notes fell to 3.73% and 30-year bonds edged down to 3.68%. 

 

Commodities Rebound 

Crude oil increased $3.30 or 4.3% to $81.83 a barrel and natural gas rose 21 cents to $6.85 a thermal unit. 

Gold jumped 1.9% to $1,659.12 an ounce and silver increased 2.9% to $18.19 an ounce and copper gained 1.9% to $3.38 a pound. 

For the year so far, gold is down 3.8%, silver has fallen 12.1% and copper has lost 19.3%. 

Lithium gained 3.1% to 510,500 yuan a ton in Shanghai trading, up 190% in the year so far. 

Lithium prices continue to advance on the expectations of a rise in demand for electric vehicles in China and the U.S. after governments in both countries extended tax-breaks for purchases. 

 

Stock Movers

Amazon, Tesla, Microsoft, Meta and Alibaba.com jumped between 1% and 4%. 

Apple Inc declined 1.5% to $149.56 after Bloomberg News reported that the company canceled plans to increase production of iPhone after demand fell short of expectations. 

BlackBerry Ltd fell 2.2% to $4.99 after the company reported revenue in the fiscal second quarter 2023 ending in August declined to $168 million from $175 million a year ago. 

Net loss in the quarter declined to $54 million from $1181 million a year ago and diluted loss per share was 9 cents from 25 cents a year ago. 

Cal-Maine Foods, Inc declined 0.3% to $60.52 after the company reported revenue in the first quarter fiscal year 2023 ending in August surged 103% to $658.3 million. 

The company swung to net income of $125.1 million from a loss of $18.02 million and diluted earnings per share were $2.57 compared to a loss of 37 cents a year ago. 

 Conventional egg net average selling price per dozen increased to $2.368 from  $0.99 a year ago, and both conventional and specialty egg revenue reached record levels for the first quarter of fiscal 2023.

The company sold 275.3 million compared to 254.6 million dozen eggs a year ago. 

DocuSign Inc increased 3.9% to $54.63 after the company announced a restructuring plan and said it plans to cut as many as 9% of its staff. 

The restructuring plan is estimated to cost between $30 million and $40 million, consisting primarily of employee transition cash expenses and are expected to be accounted for the fiscal year 2023 third and fourth quarters. 

Paychex, Inc increased 3.1% to $116.79 after the payroll service provider reported revenue in the fiscal first quarter 2023 ending in August rose 11% to $1.2 billion from $1.08 billion a year ago. 

Net income in the quarter rose 14% to $379.2 million from $333.6 million and diluted earnings per share rose to $1.05 from 92 cents a year ago. 

The company reiterated its total revenue growth guidance between 7% and 8% and revised higher its adjusted diluted earnings per share growth in the range between 11% and 12% from the previous estimate between 9% and 10%.  

Thor Industries, Inc rose 3.9% to $74.60 after the recreational vehicle maker reported revenue in the fiscal fourth quarter rose 6.4% to $3.8 billion from $3.59 billion a year ago. 

 The increase in sales was mostly driven by higher prices offsetting a decrease in unit sales. 

Net income in the quarter increased to $280.9 million from $230.0 million and diluted earnings per share rose to $5.15 from $4.12 a year ago. 

Consolidated sales in the year increased 32.4% to $16.3 billion and net income rose to $1.14 billion from $660.8 million and diluted earnings per share increased to $20.59 from $11.85. 

 

Dollar Strength Whipsaws Euro and Pound 

European markets rebounded from early losses and turned higher following the U.S. averages.

The Bank of England was forced to intervene and conduct a temporary bond purchase program to shore up the weakening pound.

The BoE said that the "temporary and targeted" purchase is carried out to solve a specific problem in the long-dated government bond and the step is fully indemnified by the treasury department. 

The central bank's intervention arrested the decline in the pound and stabilized the bond yield for now but traders are anticipating the currency to resume its slide.

The U.K. government also faced criticism from the International Monetary Fund after the multilateral agency urged the government to reconsider unfunded tax-cuts and fiscal incentives. 

The euro inched lower to 95.56 U.S. cents and the British pound fell to $1.07.

The yields on 10-year U.K. bonds held at 4.04%, the German bunds at 2.16%, French bonds at 2.72% and the Italian bonds 4.68%.

The spread between the Italian and German bonds continued to widen after the latest election results on Monday. 

German market indexes were also under pressure after the consumer confidence index plunged to -42.5 in October from the revised -36.8 level in September, according to the survey released by the research group GfK Wednesday. 

The French consumer confidence index declined to 79.0 in September from 82.0 in August, the statistical office Insee said Wednesday. 

The DAX index inched up 0.4% to 12,183.28, the CAC-40 index gained 0.2% to 5,765.01 and the FTSE 100 index advanced 0.3% 7,005.39.  

 

Porsche IPO 

Volkswagen Group priced initial public offering of Porsche Automobil Holding SE at the top end of the pricing range at 82.50 euros a share, valuing the sports car maker above 75 billion euros.