S&P 500 Index In 4-day Rally and Investors Await Inflation Report

Barry Adams
11 Oct, 2023
New York City

Stocks meandered and the release of the FOMC policy meeting minutes did little to change direction. 

Market indexes headed higher after Treasury yields edged lower for the fourth day in a row and averages dipped below the flatline by midday and managed to rebound in late afternoon trading. 

The S&P 500 index traded between 0.4% and -0.2% and the Nasdaq Composite index ranged between 0.7% and -0.1% after the yield on 10-year U.S. Treasury notes declined 12 basis points. 

Market sentiment was positive in early trading after Exxon Mobil announced a $60 billion deal to acquire shale oil producer Pioneer Natural Resources and double its energy production in the Permian Basin.  

Investors also reviewed the minutes of the latest FOMC policy meeting minutes released today and participants were divided about an additional rate hike. 

The Federal Reserve held fed funds steady at the end of a two-day meeting on September 20. 

“A majority of participants judged that one more increase in the target federal funds rate at a future meeting would likely be appropriate, while some judged it likely that no further increases would be warranted,” minutes of the meeting showed. 

On the economic front, the producer price index rose 0.5% in September from the previous month, and slower than 0.7% in August, the U.S. Bureau of Labor Statistics reported Wednesday. 

However, wholesale inflation on an annual basis accelerated to 2.2% in the month from 2.0% in the previous month and advanced for the third month in a row. 

Investors are also awaiting the release of the Federal Reserve's policy meeting minutes later in the afternoon. 

Market indexes are likely to trade volatile ahead of the release of September's consumer price inflation report on Thursday and economists are expecting annual inflation to jump as much as 3.6%.  

 

U.S. Indexes & Yields 

The S&P 500 index increased 0.2% to 4,365.59 and the Nasdaq Composite rose 0.5% to 13,618.85. 

The yield on 2-year Treasury notes decreased to 4.99%, 10-year Treasury notes inched lower to 4.59% and 30-year Treasury bonds edged down to 4.75%. 

Crude oil decreased $2.28 to $83.67 a barrel and natural gas prices eased 1 cent to $3.37 a thermal unit. 

The dollar index edged higher to 105.68, the level last seen in November 2022 and extended gains from the low of 99.85 on July 13, 2023.  

 

U.S. Stock Movers 

Humana Inc declined 1.2% to $494.0 after the health insurance company said chief executive Bruce Broussard will step down in the second-half of 2024. 

The company named health care industry veteran Jim Rechtin as President and Chief Operating Officer effective January 8, 2024, as part of a long-planned CEO transition and Rechtin will assume chief executive's role after Broussard steps down.  

Sherwin-Williams Company was unchanged at $252.0 and the company said President Heidi G Petz will assume additional role of chief executive from the  start of 2024.

Novo Nordisk AS jumped 3.4% to  $96.34 after the Danish company said it will stop kidney trials earlier because of promising results.

The company's drug therapy Ozempic uses active ingredient semaglutide, which the company also uses in the making of its weight-loss drug Wegovy. 

After the Novo Nordisk's news,  Davita Inc plunged 18% to $54.58 and Fresenius Medical Care dropped 16.7% to $17.45. 

Pioneer Natural Resources Company jumped 1.9% to $241.79 after the company agreed to be acquired by Exxon Mobil in an all-stock merger for $253 a share or $60 billion. 

 

European Markets and Bond Yields Eased 

Stocks in Europe hovered near flatline as investors prepared for a barrage of earnings next week.

Market indexes in London, Paris and Frankfurt lacked direction and investors debated interest rate paths amid resurgent crude oil and natural gas prices. 

Central bank policymakers are sending mixed signals about the future direction and level of interest rates. 

Policymakers stress their commitments in lowering inflation but show no urgency or set a timetable to bring down inflation, and at the same time inflationary forces are spreading across the wider areas of economy. 

Longer inflation stays elevated, harder it will become to dislodge without dipping the economy into a severe recession. 

 

Europe Indexes & Yields

The DAX index decreased 0.01% to 15,460.01, the CAC-40 index fell 0.4% to 7,131.21 and the FTSE 100 index eased 0.1% to 7,620.03.

The yield on 10-year German bonds decreased to 2.70%, French bonds traded lower to 3.27%, the UK gilts edged down to 4.32% and Italian bonds rose to 4.68%.

The euro edged lower to a three-month low to $1.06, the British pound to $1.222 and the U.S. dollar fetched 90.32 Swiss cents.

Brent crude decreased $1.39 to $86.24 a barrel and the Dutch TTF natural gas edged lower by €2.26 to €47.20 per MWh.

 

Europe Stock Movers

FirstGroup plc added 4.4% to 153.0  pence after the UK-based bus and rail group lifted its annual profit outlook. 

Marston's Plc declined 4.3% to 27.60 pence despite the pub operator reporting an 11% rise in sales in the fiscal year ending in September. 

Travis Perkins Plc dropped 5.7% to 759.60 pence after the U.K.'s largest distributor of building materials said annual earnings are likely to be below its forecast. 

"With commodity deflation expected to continue and the exit rate from the third quarter indicating further challenging conditions for the balance of the year," the company said in a regulatory filing. 

The company forecasted its adjusted operating profit in the range of £175 million to £195 million for the full-year.

Pagegroup dropped 4.0% to 407.0 pence after the UK-based recruitment company said its annual profits are likely to fall by a third because of ongoing macroeconomic headwinds in the UK, U.S. and Asia. 

Accor SA advanced 1.4% to €31.98 after the French hospitality group launched a €400 million stock repurchase plan. 

LVMH dropped 6.0% to €689.90 after the French luxury goods maker reported lower sales growth in the third quarter, prompting worries of an end of the post-pandemic luxury boom. 

Luxury peers Kering SA and Hermes International declined 1.5%.