Market Recap. The stock markets faced a turbulent day on Thursday, with the S&P 500 and Nasdaq closing 0.3% and 0.9% lower, respectively. Investor sentiment was marred by renewed worries over the Federal Reserve’s interest rate policies. This article will delve into the market’s recent performance, focusing on the tech sector’s struggles, currency movements, mortgage rates, and other key developments.
Tech Sector Bears the Brunt
Tech stocks took a substantial hit during the trading session, with Apple leading the charge as its shares plummeted by 2.9%. The catalyst for this decline was China’s announcement of its plans to expand the ban on iPhones in state-owned entities. Additionally, chip manufacturers Nvidia and AMD saw their shares drop by 1.7% and 2.5%, respectively. The tech sector’s underperformance cast a shadow over the broader market.
Dow Jones Bucks the Trend
In contrast to the S&P 500 and Nasdaq, the Dow Jones managed to eke out gains, finishing 57 points higher. The standout performer in this index was Intel, with its shares surging by 3.2%. Furthermore, McDonald’s saw a 1% increase in its stock price following Wells Fargo’s upgrade from „equal weight” to „overweight.”
Jobless Claims and Labor Market Resilience
On the economic data front, lower-than-expected jobless claims were a bright spot. Weekly jobless claims came in at 216,000, below the anticipated 230,000. This suggests a robust labor market, which could influence the Federal Reserve’s monetary policy decisions, potentially bolstering their hawkish stance. In addition, second-quarter labor costs exceeded expectations, further contributing to the positive labor market narrative.
Currency markets experienced fluctuations, with the Polish Zloty (-1.64%), Swedish Krona (-0.34%), and Canadian Dollar (-0.33%) facing losses. Conversely, the Japanese Yen (0.28%), New Zealand Dollar (0.16%), and Dollar Index (0.16%) posted gains, reflecting the global currency landscape’s intricacies.
Mortgage Rates Edge Lower
In the world of mortgage seekers, there has been a recent decrease in the average rate on a 30-year fixed mortgage. As of Septemberth, 2023, the rate stands at 7.12%, marking a 6bps drop from the previous week. This decline is particularly significant considering the record-high rate of 7.23% observed on August 23rd.
However, it is important to note that the current rate still remains considerably higher compared to the 5.89% rate recorded during the same period last year. With the real estate market being impacted by rising mortgage rates, potential homebuyers are faced with a greater challenge. Despite the overall strength of the economy. Freddie Mac’s Chief Economist, Sam Khater, has highlighted these concerns, shedding light on the complex landscape of mortgage rates and its effects on the housing market.
Oil Inventories and Treasury Yields
US crude oil inventories experienced a substantial decline of 6.307 million barrels in the week ending September 1st, 2023, marking the fourth consecutive week of falling inventories. This exceeded market forecasts of a 2.064 million-barrel decline.
Simultaneously, the yield on the US 10-year Treasury note approached 4.3% in early September, reflecting market expectations of sustained high interest rates. This sentiment is underpinned by positive economic indicators, such as unexpectedly lower initial jobless claims and a surge in the ISM Services PMI.
Federal Reserve’s Path
Federal Reserve officials have hinted at proceeding cautiously with future rate hikes. Governor Wallace and Boston Federal Reserve President Susan Collins both expressed the need for prudence in raising interest rates. The Fed is expected to maintain the fed funds rate this month, but the odds of a quarter-point hike in November and December have been increasing throughout the week, currently standing at 43%.
Bitcoin’s „Death Cross”
In the cryptocurrency realm, Bitcoin faces a concerning technical indicator known as the „Death Cross.” This ominous phenomenon occurs when Bitcoin’s 50-day Simple Moving Average (SMA) crosses below its 200-day SMA, often signaling impending bearish momentum. Forbes analyst Steven Ehrlich recently drew attention to this trend, which has raised concerns among Bitcoin investors.
ORCL – Take profit order up to @122.58:
MIRM – Take profit order up to @28.31:
AEYE position closed with -8.78% loss:
AGCO position closed with -4.52% loss:
AAPL – Buy long signal @178.22:
The total loss currently amounts to -0.42%.