Stocks Lack Direction and Bond Yields Resume Advance

Barry Adams
19 Oct, 2022
New York City

Stocks struggled for direction in early trading and investors worried that looming recession and elevated inflation may accelerate earnings shortfall. 

The S&P 500 index fell 0.2% to  3,712.35 and the Nasdaq Composite index declined 0.3% to 10,743.57. 

United Airlines jumped more than 7% after the international airline said resilient travel demand is likely to lift annual earnings. 

Procter & Gamble jumped 2.2% after the consumer goods maker reported better-than-expected earnings. 

Netflix Inc soared 13.8% after the streaming service provider reported strong subscriber growth and revenue and earnings rose in the third quarter. 

Crude oil rose $1.42 to $84.12 a barrel and natural gas fell 16 cents to $5.56 a thermal unit. 

The yield on 2-year Treasury notes edged up to 4.53%, 10-year Treasury notes increased to 4.10% and 30-year bonds edged higher to 4.09%. 

 

September Housing Starts Fell 

Housing starts fell 8.1% to an annualized rate of 1.439 million in September, lower than the revised 1.566 million rate in August, U.S. Census Bureau reported Wednesday. 

Home sales have been on the decline after the sustained rise in home prices and a surge in mortgage rate. 

Mortgage rates have risen from near 2.2% to above 7.2% in less than a year. 

Single-family home starts declined 4.7% to 892,000 rate, the lowest since May 2020. Multi-family housing starts dropped 13.1% to 530,000.     

 

Bond Yields Advance In Europe, Euro Eases 

European markets traded lower snapping a four-day winning streak after stocks in construction and financial services led the decliners. 

Bond yields were on the rise in Europe after the consumer price inflation in the UK rose to 10.1% in September from 9.9% in August, the Office for National Statistics reported today. 

The UK inflation rebounded to the level last seen in July stoking the fears of another large-size rate hike. 

The eurozone inflation rate was revised lower to 9.9% in September from the previous estimate of 10.0%, Eurostat said in its final report on Wednesday.  

Despite the slight downward revision, the inflation rate was record high since the comparable record keeping began in 1991, driven by a 40.7% surge in energy price following a 38.6% rise in August. 

Major averages declined in Europe and bond yields rose. 

The DAX index decreased 0.17%or 22.15 to 12,743.72, the CAC-40 index  edged up 0.07% or 4.69 to 6,069.43 and the FTSE 100 index fell 0.07% or 5.43 to 6,931.31. 

The yield on 10-year German bunds rose to 2.37%, French bonds increased to 2.95%, UK Gilts edged down to 3.88% and Italian bonds rose to 4.77%. 

The euro edged down to 97.82 U.S. cents and the British pound turned lower to $1.124. 

Brent crude oil edged up $1.30 to $91.39 a barrel and TTF natural gas futures rose 2% to 115.50 euros MWh. 

 

Asian Markets Close Mixed 

Asian markets closed mixed and bond yields rose across the region. 

The Nikkei 225 average rose 0.4% to 27,257.38, the Hang Seng index dropped 2.4% to 16,511.28 and  the Sensex index added 0.3% to 59,107.19.  

The yen traded at a new 32-year low of 149.75 and the Indian rupee dropped to a new record low of 82.94 against the U.S. dollar. 

The renminbi declined to 7.28 and the Korean won dropped to 1,434.67.