MARKETS TODAY Nov 17 (Vica Partners) – The S&P 500 down -0.99% as of 10:36 a.m. Eastern. The Dow Jones Industrial Average down 194 points, or -0.58%, to 33,360. The tech based Nasdaq down -0.92%.
Markets selloff in early Thursdays trading session with the 3 key stock market indexes down, the 10-year Treasury yield up at 3.788%, +0.094%, the 2 year Treasury yield up at 4.458%, +0.095% and the U.S. Dollar Index (DXY) up at $107.0, +0.67%. Oil prices down with Brent crude $91.56, -1.40%, and US West Texas Intermediate down at $83.63, -2.29%. Crypto measure Bitcoin at $16,512, down -0.80%.
Fed President James Bullard Thursday morning comments unsettle the markets
St. Louis Federal Reserve President James Bullard said in a speech Thursday that “the policy rate is not yet in a zone that may be considered sufficiently restrictive.”
“The change in the monetary policy stance appears to have had only limited effects on observed inflation, but market pricing suggests disinflation is expected in 2023”.
Jobless claims for the week ending Nov. 12 fell short of economists expectation “jobless claims remain near historically low levels”.
Jobless claims decreased to 222,000 and came in below average economist estimates of 225,000. Continuing claims were up to 1.507 million in the week ended Nov. 5, an increase of 13,000 from the previous weeks revised level.
The US yield curve is now the most inverted it has been since 1982
Meaning short term interest rates are moving up, closer to (or higher than) long term rates. This unusual occurrence and has historically been a very reliable indicator of an upcoming economic recession. Since World War II every yield curve inversion has been followed by a recession in the following 6-18 months.
Continue to watch S&P 4,000 level benchmark
The S&P 500 is on its 200-day moving average. The line has been a resistance level for the index, most notably in April and August and can indicate a breakout.
Keep in mind that the stock market typically performs well in November…
The stock market typically performs well in November… November is tied with April for being the second-best month of the year, with the Standard & Poor’s 500 rising 1.5% on average during the month since 1950.
Notable earnings today
Nvidia (NVDA) announced its Q3 earnings after the closing bell on Wednesday, beating analysts’ expectations on revenue, but falling short on earnings per share.
Performance metrics revenue of $5.93 billion versus $5.79 billion expected, adjusted EPS of $0.58 versus $0.70 expected, gaming revenue of $1.57 billion versus $1.32 billion expected, data center revenue of $3.83 billion versus $3.7 billion expected.
Vica Momentum Stock Report
Alpha Metallurgical Resources NYSE (AMR) (Grade A) 50 Day Average +14.64%, 100 Day Average +9.81%, 200 Day Average +124.68%, YTD +159.39%.
Alpha Metallurgical Resources Inc. is a mining company with operations principally in Virginia and West Virginia. The company supplies metallurgical products to the steel industry.
IMPORTANT TO READ; Low interest rates will return!
The Federal Reserve gave guidance that back in August of 2022 that they would raise rates to 4% and have. Rate adjustments will drive down inflation and slow the pace of the economy. Company earnings will remain mixed with stronger support for Communication services, Consumer staples, Energy, Financials and Health care. As these sectors tend to perform well during recessions
Following 2022 we expect the Central Bank to begin to cut interest rates in late Q2 of 2023 to avoid an extended recession. As the cure for inflation is not just raising rates. Vica analysts 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 still 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.
Look to Communication services, Consumer staples, Energy, Financials and Health care as these sectors tend to perform well during recessions
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 6-8% 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 is already regaining strength
*** Banks will profit from higher interest rates on new loans and other products which will offset defaults