MARKETS TODAY Oct 25 (Vica Partners) – The S&P 500 up 1.34% as of 2.50 p.m. Eastern. The Dow Jones Industrial Average up 280 points, or 0.88%, to 31,779. The tech based Nasdaq up 1.92%.
Stock indexes all up today in the trading session, the 10-year Treasury down with a yield at 4.106%. U.S. Dollar Index (DXY) is also down at $110.92. Oil prices mixed with Brent crude $93.13, -0.14%, and US West Texas Intermediate $85.04, +0.54%.
The Conference Board Consumer Confidence Index out today
Consumer confidence declined in October, after advancing in August and September, suggesting economic growth slowed to start Q4. Consumer Confidence Index decreased in October after back-to-back monthly gains. The Index now stands at 102.5, down from 107.8 in September.
- The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—declined to 138.9 from 150.2 last month.
- The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—declined to 78.1 from 79.5.
Panic over company earnings, reports on declining consumer confidence and of Fed rate hike fears are beginning to subside
In 2022 the reality for most investors is that that their portfolio is already down more than 30% for year. The Fed has raised rates by three-quarters of a percentage point at each of its last three meetings and the central bank will do it again on Wednesday, Nov. 2.
So why does bad suddenly look good… 1. The housing market has declined as mortgage rates now exceed 6%, 2. Manufacturing and services growth has slowed, 3. Rising energy prices could will continue to offset consumer demand 4. Geopolitical issues
This bad news is probably good news for inflation
The Fed will continue to assess the impact of existing rate hikes and may even cut rates in 2023. In addition the volatility Index, or VIX, are returning to more stable levels.
Value is king and performance in key sectors remain strong (emerging 30 day Sector watchlist)
Rental & Leasing Industry +49.4%, Oil Well Services & Equipment Industry +42.8%, Iron & Steel Industry +20.1%, Biotechnology & Pharmaceuticals Industry +19.3%, Airline Industry +18.4%, Broadcasting Media & Cable TV Industry +17.9%, Construction & Mining Machinery Industry +17.6%, Aluminum Industry +16.0%, Life Insurance Industry +15.8%, Educational Services Industry +15.4%.
Companies today reporting strong third quarter earnings
General Motors up 3.5% after delivering solid results. United Parcel Service up after the beating Wall Street’s third-quarter earnings and revenue forecasts. Paint maker Sherwin-Williams also up after reporting strong financial results.
IMPORTANT TO READ as low interest rates will return
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 will rise “as there are production shortages” which include: iron, copper and crude oil. Upside will continue!
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 5-7% valuation correction for speculative stocks. DON’T try to time market lows!
*** Watch for our emerging 30/ 60/ 90 day Sector and leading company watchlist’s
*** 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
*** Banks will profit from higher interest rates on new loans and other products which will offset defaults
