Stocks, Bond Yields and Commodities Fall On Global Slowdown Worries

Barry Adams
03 Jan, 2023
New York City

Stocks drifted lower, commodities eased and bond yields rose as three markets reacted differently to the ongoing rate path and economic slowdown worries. 

Stock market focused on the Federal Reserve's aggressive rate hike stance, commodities focused on the slowing worldwide demand and the bond market drew liquidity from investors looking for safe haven.  

Ongoing concerns of rate path worries and economic slowdown were compounded by the worries of slowdown in China and in the European Union. 

The Chinese economy continues to struggle with the rapid spread of a highly infectious and deadly variant of coronavirus. 

The Chinese manufacturing activities growth contracted for the fourth month in a row according to the data released by the National Bureau of Statistics. 

A private survey showed China's manufacturing output growth contracted for the fifth month in a row, a second report confirming the weakening trend in China.

Moreover, the IMF also said that China's economic growth is likely to be near or below the average global growth for the first time in four decades. 

Investors were also cautious ahead of a slew of economic reports in the U.S. this week. Minutes of the Federal Reserve's latest minutes of meeting are scheduled on Wednesday and December jobs report on Friday.  

Germany's Consumer Price Index increase slowed to an annual pace of 8.6% in December from 10.0% in November, the Federal Statistics Office said Tuesday. 

Construction spending rose 0.2% in November from the downwardly revised 0.2% fall in October, the U.S. Census Bureau reported Wednesday. 

Indexes In Review 

Benchmark indexes opened higher but failed to hold onto early gains. 

Popular indexes accelerated the decline after crude oil prices dropped more than 4% on weak demand outlook and natural gas prices plunged 12% on rising supply. 

The S&P 500 index declined 0.8% to 3,809.37 and the Nasdaq Composite index dropped 1.1% to 10,356.85. 

Crude oil prices dropped $3.04 to $77.97 a barrel and natural gas fell 11.3% to $3.96 a thermal unit.

The bond yields eased on speculation that the Federal Reserve will slow its aggressive rate hike stance to avoid dipping the economy into a recession. 

The yield on 2-year Treasury notes inched higher to 4.41%, 10-year notes fell to 3.78% and 30-year Treasury bonds declined to 3.87%.   

 

U.S. Stock Movers 

Tesla Inc plunged 13.1% to $106.93 after the automobile maker's fourth quarter deliveries disappointed investors. 

In the fourth quarter, Tesla produced 439,701 vehicles and delivered 405,278 vehicles. 

In 2022, the company sold 1.31 million vehicles, 40% higher than a year ago. 

In the 2021 fourth quarter Tesla delivered 308,600 vehicles and in full-year delivered 936,172 vehicles.  

The company has been struggling to sell luxury vehicles in China after zero-Covid policy restricted mobility in the first ten weeks of the last quarter. 

Apple Inc declined 3.3% to $125.03 on the worries that iPhone sales may fall more than 20% in the latest quarter on the ongoing demand weakness in China and at home in the U.S. 

Apple stock declined 18% in 2022 and investors worried that a slowing global economy may dampen the appetite for expensive electronic gadgets.