Daily Market View
Thursday, October 11, 2018
| U.S Stock Market
U.S stock indexes dropped sharply yesterday, and the S&P 500 was on pace for its worst day since June, as interest rates resumed their climb. Treasury yields have jumped over the last week, which has weighed on stocks around the world, and the 10-year yield once again touched its highest level in seven years yesterday. The rise in rates is weighing particularly heavily on areas of the market that had earlier been the biggest winners, and technology stocks had some of the morning’s steepest losses. The S&P 500 was down 1.4 percent. It’s on pace for its fifth straight decline and is close to its lowest level in two months. The Dow Jones industrial average lost 363, or 1.4 percent and the NASDAQ dropped 165, or 2.1 percent. Tech stocks and companies that sell non-essentials to consumers have been some of the top performers over the last year, nearly doubling the performance of the S&P 500. They’ve also dropped more than the rest of the market so far this month. Tech stocks in the S&P 500 fell 2.7 percent for the steepest loss among the 11 sectors that make up the index.
|Major Economic Releases for Today|
||Bank of England Credit Conditions & Bank Liabilities Surveys||08:30|
|Canada New Housing Price Index (YoY)||12:30||0.5%||0.5%|
|U.S Consumer Price Index (YoY)||12:30||2.4%||2.7%|
|U.S Consumer Price Index Ex Food and Energy (YoY)||12:30||2.3%||2.2%|
|U.S Real Avg Weekly Earnings (YoY)||12:30||0.5%|
|U.S Real Avg Hourly Earning (YoY)||12:30||0.2%|
|U.S Initial Jobless Claims||12:30||210k||207k|
|U.S Continuing Claims||12:30||1650k|
|DOE U.S Crude Oil Inventories||15:00||7975k|
|Dow Jones Industrial Average
The Dow Jones Industrial Average fell 3.15% to hit a new 1-month low. The best performers of the session on the Dow Jones Industrial Average were McDonald’s Corporation, which fell 0.86% or 1.46 points to trade at 168.37 at the close. Meanwhile, Procter & Gamble Company fell 0.92% or 0.76 points to end at 81.44 and Home Depot Inc. was down 1.05% or 2.05 points to 193.70 in late trade. The worst performers of the session were Nike Inc., which fell 6.81% or 5.48 points to trade at 74.94 at the close. Microsoft Corporation declined 5.43% or 6.10 points to end at 106.16 and Visa Inc. was down 4.77% or 6.79 points to 135.52.
The NASDAQ index declined 4.08%. The top performers on the NASDAQ were AcelRx Pharmaceuticals Inc. which rose 35.66% to 3.595, Easterly Acquisition Corp which was up 30.67% to settle at 13.59 and Imperva Inc. which gained 27.98% to close at 55.11. The worst performers were One Horizon Group Inc. which was down 35.90% to 0.2500 in late trade, Arbutus Biopharma Corp which lost 23.83% to settle at 4.570 and Intellipharmaceutics International Inc. which was down 21.80% to 1.040 at the close.
Oil prices fell yesterday after the IMF lowered its global economic growth forecasts, raising concerns that demand for oil products may slump as well. U.S crude was down by $1.18, or 1.6 percent, at $73.78 a barrel, after rising nearly 1 percent in the previous session. The International Monetary Fund downgraded its global economic growth forecasts for 2018 and 2019 on Tuesday. Trade wars and rising import tariffs have been taking a toll on commerce while emerging markets struggle with tighter financial conditions and capital outflows, the IMF said. But supply concerns are keeping the market on edge. In the United States, nearly 40 percent of daily crude oil production was lost from offshore U.S Gulf of Mexico wells on Tuesday because of platform evacuations and shut-ins ahead of Hurricane Michael. Michael has strengthened into an “extremely dangerous” Category 4 hurricane, according to the latest advisory from the U.S. National Hurricane Center.
|Precious and Base Metals
Gold prices eased yesterday as U.S Treasury yields surged, with further bearish influence from a hawkish outlook for interest rates. Spot gold fell 0.2 percent to $1,187.41 per ounce. U.S gold futures were steady at $1,191.20 an ounce. U.S Treasury yields advanced, holding near multi-year highs after government data showed the U.S producer prices index (PPI) climbed in September, suggesting interest rates would be hiked at a faster pace to tame inflation. The higher yield environment and stronger dollar are providing a toxic mix for gold. The trend for yields has been bullish and they could rise further from here. It will be hard for gold to sustain any rallies in this environment. Higher Treasury yields can translate into more demand for the dollar since the currency is used to buy bonds, a traditional safe haven. This tends to dent the appeal of gold as a safe store of value and makes bullion more expensive for holders of other currencies, eroding demand. Gold has fallen over 13 percent since hitting a peak in April, with investors increasingly opting for the safety of the greenback as the U.S.-China trade war unfolded against a backdrop of rising U.S interest rates. Gold prices may struggle to rebound over the remainder of 2018. Strong U.S economic growth, concurrent monetary policy normalization by the U.S Federal Reserve and a strong dollar will all limit the attractiveness of holding gold as an investment. The Fed increased interest rates last month for the third time this year and is widely expected to hike again in December, with no suggestion its tightening policy will cease any time soon. Gold has held in a $34 range for the last 1-1/2 months, propped up by limited safe-haven buying at the lower end of the range, spurred by concerns over economic growth and inflationary pressure from soaring oil prices. Analysts said the upside could be limited by waning demand due to depreciating domestic currencies in major gold-consuming countries such as India. Spot silver fell 0.7 percent to $14.29.
Wheat ticked higher as fears of flooding in the U.S Plains after heavy rains supported the market although strong exports from Russia, the world’s biggest supplier, limited gains.
|Futures Settlement Price Wednesday, October 10, 2018|
|S & P 500||SPM18||2886.75||2891.25||2779.75||2780.75||-107|
|Daily Swings (The Pivot Levels)|
Source: – News & Quotes (Courtesy: Reuters)
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