Stocks Stumble. The US stock market faced headwinds on the third triple witching day of 2023, failing to capitalize on the previous day’s rally. Major indices, including the Dow Jones, S&P 500, and Nasdaq, faced losses, with megacap tech giants like Amazon, Nvidia, and Microsoft leading the decline.
Meanwhile, Adobe disappointed investors despite meeting earnings and outlook expectations, and Planet Fitness saw a significant drop in its shares after a change in leadership. On a different note, General Motors and Stellantis saw modest gains as a strike by the United Auto Workers disrupted production. The week’s performance for these indices was lackluster, with anticipation building for the upcoming FOMC monetary policy decision.
Manufacturing Production Shows Mixed Signals
In August 2023, US manufacturing production increased by a modest 0.1% from the previous month, aligning with expectations. The durable manufacturing sector saw a slight uptick of 0.1%, while nondurable manufacturing posted a 0.2% increase. However, other manufacturing segments, such as publishing and logging, experienced a 0.2% decline.
Notable gains were observed in primary metals, machinery, aerospace, furniture, and miscellaneous manufacturing, each surpassing 1%. In contrast, motor vehicle and parts production fell by 5%. The capacity utilization rate for manufacturing remained at 77.9%, slightly below its long-term average.
Consumer Sentiment Dips, Reflecting Economic Concerns
The University of Michigan’s consumer sentiment index for September 2023 declined to 67.7, down from 69.5 in the previous month, signaling waning optimism among American consumers. This decrease was particularly pronounced in the gauge for current economic conditions, which dropped sharply to 69.8 from 75.7.
Soaring prices for food and fuel have negatively impacted consumers’ purchasing power and living standards. However, consumers’ future expectations improved to 66.3 from 65.5, driven by the belief that elevated inflationary pressures will ease. Year-ahead inflation expectations also decreased to 3.1%, the lowest since March 2021, down from 3.5% in the previous month.
Stronger Demand Boosts Global Shipping Costs
The Baltic Exchange’s main sea freight index, which tracks the cost of shipping goods worldwide, continued its upward trajectory, rising 3.1% on the eighth consecutive day. The index reached its highest level since May 19 at 1,2381 points. This increase was driven by robust demand across all vessel segments.
The capesize index, mainly involving vessels carrying heavy cargoes like iron ore and coal, surged by 6% to a one-month peak of 1,602 points. Additionally, the panamax index, tracking ships for coal and grain cargoes, rose by 14 points to 1,656 points. Smaller vessels also saw gains, with the supramax index adding 25 points, or 2.1%, reaching 1,221 points. For the week, the Baltic index climbed by 16.4%, the most significant increase since March, largely fueled by higher rates for capesize (24.3%) and panamax (11.2%) segments.
Currency Market Movements
In the currency market, the Russian Ruble led the losses with a decline of 1.57%. Followed by the Turkish Lira (-0.45%) and the Norwegian Krone (-0.32%). On the positive side, the Euro gained 0.27%, while the Mexican Peso and Chinese Yuan rose by 0.19% and 0.17%, respectively.
US stock markets faced a challenging day amid a triple witching event, with megacap tech stocks leading the losses. Economic indicators presented mixed signals, as manufacturing production showed modest growth while consumer sentiment dipped, reflecting concerns about inflation and economic conditions. Meanwhile, global shipping costs continued to surge due to strong demand across vessel segments, and currency markets experienced notable fluctuations. With anticipation building for the upcoming FOMC monetary policy decision, investors will closely monitor economic developments in the weeks ahead.