Averages Fall 2% With Rate Hike In Focus

Barry Adams
29 Sep, 2022
New York City

Tech stocks led the decliners on Wall Street after the latest jobs report highlighted labor market strength. 

The stronger-than-anticipated jobless report reinforced the strength in the labor market and provided one more signal to the Fed in continuing its campaign to lift rates. 

Benchmark indexes opened sharply lower after the jobs report knocked the sentiment down. 

Moreover, the sentiment in the tech sector weakened after Apple Inc was downgraded. 

Jobless Claims Signal Strong Labor Market 

Initial weekly jobless claims rate dropped less-than-expected to 196,000 in the week ending September 24. 

The fewer-than-expected claims offered yet another impetus to the Federal Reserve in continuing its campaign to lift by a large amount of 75 basis points.  

Seasonally adjusted weekly initial jobless claims declined 16,000 to 193,000 in the week ending September 24, the Department of Labor said Thursday. 

Unadjusted initial claims fell 12,642 to 156,060 led by significant declines in Michigan (5,674), New Jersey (1,521) and New York (1,266). 

The 4-week moving average declined 8,750 to 207,000. 

 

Stock Movers 

Tech stocks were under pressure after Bank of America downgraded Apple stoking anxieties of similar downgrades for other leaders in the sector. 

Apple, Google, and Microsoft dropped to 18-month lows and Intel declined to a 8-year low.  

Semiconductor makers, retailers, furniture makers and cruise liners were among the leading losers of the day.  

The S&P 500 index fell 2.1% to 3,640.47 and the Nasdaq Composite index dropped 2.8% to 10,737.51.   

Apple Inc plunged 4.9% to $142.48 after Bank of America analyst downgraded the stock to "neutral" from "buy" on the expectations of weakening consumer demand. 

Bed Bath & Beyond Inc plunged 9.2% to $5.87 after the troubled retailer of home and kitchen goods reported a large quarterly loss. 

The retailer's gross margin plunged after the company marked down prices on several goods to clear inventories ahead of holiday season. 

Bassett Furniture Industries Inc declined 2.2% to $16.11 after the  company said revenue in the fiscal 2022 third quarter rose 12.5% to $118 million from $104.9 million a year ago. 

Net income in the quarter rose to $7.6 million from $3.01 million and diluted earnings per share increased to 82 cents from 31 cents a year ago. 

CarMax, Inc plunged 23.7% to $65.98 after the used-car retailer reported weaker-than-expected quarterly results. 

The auto retailer also said that rising rates and prices kept many buyers away in the final month of the latest quarter.

 

Energy Markets Flirt Gave Up Early Gains 

Crude oil prices gained in early trading after U.S. oil inventories declined unexpectedly in the previous week. 

Investors are also awaiting the OPEC+'s decision as the oil cartel is expected to cut supply and shore up falling price of the commodity. 

Crude oil fell 60 cents to $81.58 and natural gas decreased 8 cents to $6.87 a thermal unit.  

Gold, silver and iron ore closed nearly unchanged but copper gained 2% to $3.45 a pound. 

 

Bond Yields Edge Lower After Pushing Higher 

The yield on 2-year Treasury notes increased to 4.20%, on 10-year Treasury notes inched up to 3.79% and 30-year bonds advanced to 3.72%.

 

Eurozone Economic Sentiment Worsens 

 The economic sentiment - an aggregate index of business and consumer sentiment - in the euro declined to 93.7 in September from 97.3 in August, the European Commission said on Thursday. 

The index dropped to a two-year low, the lowest level seen since November 2020. 

Inflation expectation index increased to 41.3 in September from 37.0 in August.   

 

Consumer Prices Jump Record 10% In Germany 

Consumer prices in Germany shot up a record 10.0% from a year ago in September, according to a preliminary report released by the Federal Statistics Office or Destatis on Thursday. 

Consumer price inflation accelerated after rising 7.9% in August. 

On a monthly basis, prices rose 1.9% in September, slower than 

The goods price surged 17.2% in September from 14.7% in August and services prices rose 3.6% from 2.2% in the corresponding period.

 

Italian Wholesale Prices Jump Record 40%

Wholesale prices in Italy surged to record 40.1% in August after rising 36.9% in July, the National Institute of Statistics said on Thursday. 

The producer price increase was driven by a surge in energy costs of 126.8% followed by intermediate goods price increase of 17.8%, consumer goods 9.5% and capital goods 9.1%.  

 

European Markets Accelerate Declines

Benchmark indexes in Europe resumed their declines after recession worries gripped the market. 

Benchmark indexes across Europe opened weaker a day after the Bank of England intervened to stabilize bond and currency trading in the UK. 

However, the boost from the emergency operation faded in less than 24 hours and the market averages and the pound resumed their slides again. 

Major averages accelerated the declines after the release of the U.S. jobs report indicating the strength in the labor market. 

The DAX index declined 1.6% to 11,995.17, the CAC-40 index dropped 1.44% to 5,681.94 and the FTSE 100 index fell 1.2% to 6,919.76. 

Brent crude rose 80 cents to $90.111 a barrel and TTF natural gas futures plunged 9.9% to 186.50 megawatt per hour. 

The euro inched higher to 97.16 U.S. cents and the British pound rebounded slightly to $1.093. 

 

China Stocks Mixed Ahead of Holiday Week, Sensex Extends 7-day Losses

Markets in Asia traded higher following the gains in Europe and rising commodities prices.

China benchmark indexes ended flat ahead of the 7-day Golden Week holidays between October 1 and 7.

The Shanghai Composite Index eased 0.1% lower to 3,041.20, erasing most of the early gains in the day.

The  Hang Seng Index ended down 0.5% to 17,165.87, after dropping to the low last seen in October 2011.  

The Hang Seng index has lost about 26.5% in the year so far and dropped about 40% in the last five years.

Shanghai Composite is down 16.2% in the year so far.

In Tokyo, the Nikkei 225 index gained 1.0% to 26,422.05 and the broader Topix increased 0.7% to 1,868.80.

For the year so far, the Nikkei index is down 10.5%.

Fast Retailing Co Ltd jumped 2.2% following a similar rise in Softbank.

Pharmaceuticals and resource sector stocks led the gainers and Eisai Co Ltd  soared 13.5% after the company reported an unexpected positive trial results for an experimental Alzheimer's drug.  

The Japanese yen held steady at 144.52 to a dollar.

Benchmark indexes in Mumbai turned lower for the seventh day in a row ahead of the rate decision from the Reserve Bank of India on Friday.

The RBI is expected to lift the key lending rate by at least 40 basis points and stem the slide in the rupee.

The Indian rupee dropped to a new low of 81.80 to a dollar.  

The Sensex index fell 188.32 points or 0.33% to 56,409.96 and the Nifty index declined 40.50 points or 0.24% to 16,818.10.

Australian stocks closed higher after crude oil and gold prices rebounded from the 9-month lows.

The ASX 200 Index increased 1.4% to 6,555.00 and the broader All Ordinaries Index added 1.5% to 6,760.60.

BHP Group, Fortescue Metals Group, Woodside Energy Group and Santos Ltd gained between 2% and 3%.