MARKETS TODAY Oct 10 (Vica Partners) – The S&P 500 down 1.32% as of 1.05 p.m. Eastern. The Dow Jones Industrial Average down 256 points, or -.87%, to 29,040. The tech based Nasdaq down 1.81% and earlier hit a new 2 year low at 10,449.
Stocks slump Monday with indexes seeking bottoms, with the market looking to the Fed for next steps. The 10-year Treasury note yield is flat at 3.89%. U.S. Dollar Index (DXY) up and continuing to rise at $113.27. Oil prices slightly negative today with Brent crude -.37% and US West Texas Intermediate crude -.02%.
Nasdaq Composite down more than 1.8% today, its lowest levels since September 2020.
Tech shares continue to sell-off as rising rates and historically high valuations have investors looking for more secure returns. Semiconductor stocks are being hard hit!
Market continues pricing in a 75 basis points Fed Rate hike in Nov
As the September jobs report showed the labor market remains tight and that will keep the Fed on course for continuing to aggressively tighten monetary policy.
OPEC+ oil production cut last week contributes to higher domestic gas prices
Look for gas prices to continue to increase throughout the Quarter which should raise core CPI numbers.
BIG data out Thursday with Consumer Price Index and Jobs
Our teams are not expecting any surprises and look for on-forecast projections, reflecting stubborn but in control inflation levels. We project a 68.6% chance of a market mid to late week rally
Wednesday
- Producer price index Sept. forecast : 0.2% last month: -0.1%
Thursday
- Core CPI Sept. forecast: 0.5% last month: 0.6%
- CPI (year-on-year) Sept. forecast: 8.1% previous: 8.3%
- Core CPI (year-on-year) Sept. forecast: 6.6% previous: 6.3%
- Initial jobless claims forecast: 215,000 last month: 219,000
IMPORTANT TO READ as we forecast that inflation will turn into deflation in 2023
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 continue to forecast a negative 4-6% 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
