MARKETS TODAY @12:40 p.m EST
Sept 22 (Vica Partners) Dow down 2.33%, S&P 500 down 2.44%, Nasdaq down 2.38%
All Major indexes set for a sixth weekly loss in the last seven weeks as the Fed also projected a higher peak rate than what the market had expected yesterday. Treasury yields continue to rise, with the 10-year note breaking through 3.70%. West Texas intermediate crude oil falling below $79 per-barrel level.
Dow Jones set to test June low
The Dow Jones Industrial Average has dropped 690 points, or 2.30%, and the index opened below 30,000 points and testing a June 29,888 low. The S&P 500 and Nasdaq composite are already in record low territory.
2-year Treasury yield is a measure of the markets expectations for the federal funds rate
The 2-year Treasury yield rose to 4.225%, which sets a new year high.
10-year Treasury is a measure of longer-term inflation and economic growth expectations
The 10-year yield rose to 3.81%, which sets a new year high.
US private sector output falls at softer pace as new orders return to growth in September
Key findings:
- The headline Flash US PMI Composite Output Index registered 49.3 in September, up from 44.6 in August, to signal a softer and only marginal decline in private sector business activity.
- New orders received by private sector firms returned to expansionary territory in September, with growth broadbased across the manufacturing and service sectors. The upturn was only mild, despite being the quickest since May.
- S&P Global Flash US Manufacturing PMI™; At 51.8 in September, up slightly from 51.5 in August, the S&P Global Flash US Manufacturing PMI continued to signal a relatively subdued improvement in the health of the manufacturing sector. The September headline reading was the second-lowest since July 2020.
Based on our data what we expect over the next few weeks
The markets have pretty must established the prior index low S&P 500 at 3640 today. We still expect another 6% correction off that low, followed by a strong correction with index reversal around 3500.
VERY IMPORTANT TO READ as Inflation will turn into deflation
The Federal Reserve will be forced to cut interest rates in 2023 if a deep recession occurs as the cure for inflation is not just raising rates. As we see a significant policy change coming by late Spring of 2023 with Powell reversing direction… just look at 12 month declining lower commodity pricing and new reports on rising retail inventories.
Yearly commodity prices continue to drop include: iron ore -61%, copper -30%, crude oil -40%.
Solid strategy for these type of market days ….
We suggest investing in companies that have solid balance sheets and offer dividends.
Best to continue to cost average buy value stocks and resist most all tech and growth stocks where companies have negative margins. Our Teams forecast a negative 10-13% valuation correction for speculative stocks. DON’T try to time market lows!
*** Look to Index ETF’s like SPY to outperform stocks and most managed funds
*** Energy is the Top Performing Sector in S&P 500 Year to Date and will regain strength shortly
