Global Markets Await Rate Decision, Recession Worries Loom

Barry Adams
01 Nov, 2022
New York City

Stocks were under pressure after the release of the latest labor market survey and manufacturing survey. 

Investors are anticipating the Federal Reserve to lift rates and guide the future rate hike direction.

Financial markets have been roiled by the future rate path and the looming recession worries and the Fed's quantitative tightening plans. 

Despite the Fed's five rate hikes in 2022 and initiating a plan to sell Treasury securities, inflation has remained above 8% and nowhere near the Fed's target range of 2%.   

The strong jobs report provided yet another signal to policymakers and forces fueling inflation. 

Job Openings Rose in September 

Job openings in September rose to 10.72 million from the revised 10.21 million in August and from 10.67 million a year ago, according to the latest Job Openings and Labor Turnover Survey released by the Bureau of Labor Statistics. 

The largest job openings were in accommodation and food services and in health care and social assistance. 

The closely watched jobs report is not likely to prevent the Fed's policy makers from lifting the key lending rate by 75 basis points at the end of the rate decision meeting tomorrow.   

 

Factory Orders Growth Cools 

Another report showed manufacturing expansion cooled to the slowest pace to 50.2 in October from 50.9 in September.  

The ISM Purchasing Managers Index for manufacturing dropped to the lowest level since the contraction in May 2020. 

The 50-mark line separates growth from contraction. 

 

Stocks Lack Direction, Yields Inch Higher 

Stocks were under pressure and closed down ahead of the rate decision tomorrow. 

Bond yield traded sideways and stocks lacked direction on the worries that the Fed may not back off from its hawkish rhetoric. 

The S&P 500 index declined 0.4% to 3,856.10 and the Nasdaq Composite index fell 0.9% to 10,890.85. 

Crude oil rose $1.83 to $88.33 a barrel and natural gas increased 53 cents to $5.82 a thermal unit. 

The yield on 2-year Treasury notes inched higher to 4.55%, 10-year Treasury notes to 4.04% and 30-year bonds to 4.10%.  

 

Movers: Avis, Goodyear, Uber 

Avis Budget declined more than 7% despite the rental car company reporting earnings ahead of expectations driven by the resurgent travel demand. 

Uber Technologies Inc soared 13% after the company reported better-than-anticipated earnings and estimated fourth quarter adjusted earnings ahead of expectations. 

Goodyear Tire & Rubber Co dropped 13% after the company reported weaker-than-anticipated earnings on rising product costs and negatively impacted by the surging dollar. 

 

European Markets UP, Germany's Import Inflation Eases 

European markets closed up as investors digested a fresh batch of earnings and economic news in the region.

Germany's import price inflation cooled in September to 29.8% from 32,7% in August, according to the latest data released by Destatis Tuesday.

UK manufacturing activities fell at the fastest pace in more than two years in October, according to the data released from S&P Global Tuesday.

The Chartered Institute of  Procurement & Supply factory Purchasing Managers' Index decreased to 46.2 in October from 48.4 in September.

The DAX index increased 0.6% to 13,338.74, the CAC-40 index rose 1% to 6,328.25 and the FTSE 100 index added 1.3% to 7,186.16. 

Brent crude increased $1.88 to $94.69 a barrel and TTF natural gas prices fell to 116.19 euros a MWh. 

The euro edged down to 98.81 U.S. cents and the British pound to $1.14. 

 

Europe Stock Movers 

Diageo Plc gained 0.4% after the company said it is starting its stock repurchase program's fourth and final phase.

The company intends to purchase