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%.