Economic Uncertainty as Home Prices Rise, Indices Face Pressure, Sector Performance Declines, and VIX Jumps 12%

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Daily Market Insights: September 26th, 2023

Global Markets Summary:

Asian Markets:

  • Hong Kong’s Hang Seng: -1.46%
  • Japan’s Nikkei 225: -1.11%
  • China’s Shanghai Composite: -0.37%

US Futures:

  • S&P Futures: opened @4,312.88 (-0.57%)

European Markets:

  • London’s FTSE 100: +0.08%
  • Germany’s DAX: -0.97%
  • France’s CAC 40: -0.70%

US Market Snapshot:

Key Stock Market Indices:

  • DJIA ^DJI: 33618.88 (-388.00, -1.14%)
  • S&P 500 ^GSPC: 4273.53 (-63.91, -1.47%)
  • Nasdaq Composite ^NASX: 13063.61 (-207.71, -1.57%)
  • Nasdaq 100 ^NDX: 14545.83 (-223.07, -1.51%)
  • NYSE Fang+ ^NYFANG: 7260.23 (-132.21, -1.78%)
  • Russell 2000 ^RUT: 1761.61 (-22.63, -1.27%)

Market Insights: Performance, Sectors, and Trends:

  • Economic Data: Improved home prices and sales amid declining consumer confidence indicate economic uncertainty.
  • Market Indices: DJIA, S&P 500, and Nasdaq Composite faced pressure, with NYSE Fang+ leading the downturn.
  • Sector Performance: All 11 sectors declined, led by Energy (-0.50%) and lagging in Utilities (-3.05%).
  • Factors: Small Cap Growth and High Dividend outperformed (-1.0%), followed by Mega Cap Value and IPOs at (-1.1%).
  • Top ETF: ProShares Ultra VIX Short Term Futures ^UVXY: +13.89%.
  • Worst ETF: Direxion Daily Semiconductor Bull 3X Shares ^SOXL: -5.38%.
  • Treasury Markets: Long-term bonds, like the 30-Year Bond, had higher yields; 10-2 Year and 10-3 Month spreads narrowed.
  • Currency and Volatility: U.S. Dollar Index rose, CBOE Volatility increased, Fear & Greed Index indicated fear.
  • Commodity Markets: Gold Futures and Bitcoin fell, Crude Oil Futures WTI rose, and Bloomberg Commodity Index declined.

Sectors:

  • Sector Performance: All 11 sectors declined, led by Energy (-0.50%) and lagging in Utilities (-3.05%).

Treasury Yields and Currency:

  • In Treasury markets, long-term bonds, like the 30-Year Bond, saw increased yields, while short-term bills had minor fluctuations. Additionally, yield spreads shifted, with the 10-2 Year spread narrowing and the 10-3 Month spread declining significantly.
  • The U.S. Dollar Index ^DXY: 106.17 (+0.17, +0.16%)

Market Volatility and Sentiment:

  • CBOE Volatility ^VIX: 18.94 (+2.04, +12.07%)
  • Fear & Greed Index (TY/LY): 27/17 (Fear/Extreme Fear).

source: CNN Fear and Greed Index

Commodities:

  • Gold Futures: 1900.55 (-15.73, -0.82%)
  • Bitcoin USD: 26222.50 (-86.10, -0.33%)
  • Crude Oil Futures WTI: 90.66 (+0.98, +1.09%)
  • Bloomberg Commodity Index: 105.41 (-0.35, -0.33%)

Factors:

  • Small Cap Growth and High Dividend outperformed with a drop of (-1.0%) followed by Mega Cap Value and IPO’s at (-1.1%).

ETF Performance:

Top 3 Best Performers:

  • ProShares Ultra VIX Short Term Futures ETF ^UVXY: +13.89%
  • iPath Series B S&P 500 VIX Short-Term Futures ^VXX: +9.34%
  • ProShares UltraPro Short QQQ ^SQQQ: +4.56%

Top 3 Worst Performers:

  1. Direxion Daily Semiconductor Bull 3X Shares ^SOXL: -5.38%
  2. Pro Shares UltaPro QQQ ^TQQQ:-4.46%
  3. Utilities Select Sector SPDR Fund ^XLU: -2.99%

US Economic Data

  • S&P/Case-Shiller Home Price YoY change: 0.1% (prev. -1.2%), MoM change: 0.6% (prev. 0.9%)
  • House Price Index YoY change: 4.6% (prev. 3.2%), MoM change: 0.8% (prev. 0.4%)
  • Consumer Confidence (Conference Board): 103 (prev. 108.7), below consensus (105)
  • New Home Sales MoM: 675 (prev. 739k), below consensus (700k)

Earnings:

  • Q1 ’23: 79% of companies beat analyst estimates.
  • Q2 Forecast/Actual: Predicted <7.2%> FY 2023 S&P 500 EPS decline; FY 2023 EPS flat YoY. By 7-28, 51% reported Q2 2023 results; 80% beat EPS estimates, above 5-year (77%) and 10-year (73%) averages. Earnings exceeded estimates by 5.9%, slightly below the 5-year (8.4%) and 10-year (6.4%) averages.
  • Q3 Forecast: S&P 500 to see -0.2% YoY earnings decline, marking 4th consecutive drop. S&P 500’s 12-month P/E ratio is 18.0, below 5-year (18.7%) average but above 10-year (17.5%) average. 74 S&P 500 firms gave negative EPS guidance, 42 exceeded expectations with positive guidance.

Notable Earnings Today:

  • Beat: Costco (COST), Cintas (CTAS), Ferguson (FERG), Progress (PRGS), AAR (AIR), MillerKnoll (MLKN)
  • Miss: Synnex (SNX), United Natural Foods (UNFI)

Resources:

News

Investment and Growth News

  • OpenAI Seeks New Valuation of Up to $90 Billion in Sale of Existing Shares – WSJ
  • Japanese Automakers Stand to Gain From Detroit’s Labor Strike – Bloomberg
  • Alibaba’s Cainiao and AliExpress start ‘5-day global delivery’ service for consumers in UK, Spain, Netherlands, Belgium and South Korea – SCMP

Infrastructure and Energy

  • Lithium Boom in Argentina Hinges on Politics, Zijin Unit Says – Bloomberg
  • US Energy Policy Hindering Oil Production, Chevron CEO Says – Bloomberg

Real Estate Market Updates

  • Surging Insurance Costs Have Come for Office Landlord – WSJ

Central Banking and Monetary Policy

  • U.S. Home Prices Increased in July – WSJ
  • US Consumer Confidence Drops to a Four-Month Low on Outlook – Bloomberg

International Market Analysis (China)

  • China still a key market, US businesses say, but hope dims for improved prospects – SCMP

Journal

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