MARKETS TODAY Nov 28 (Vica Partners) – U.S. stocks pulled back Monday on Federal Reserve remarks on inflation and protests across China against the country’s zero-Covid policy which both renewed worries among investors about the outlook for growth.
The S&P 500 fell 1.54% as of 4 p.m. ET and the Dow Jones Industrial Average lost 1.45%, or 498 points. The Nasdaq Composite declined 1.6%.
Key Market Statistics
- All 3 major stock market indexes ended lower today
- 10-year Treasury yield flat at 3.679%, the 2 year Treasury yield flat at 4.444%
- S. Dollar Index (DXY) up at $106.67, 0.67%
- Bitcoin slips to $16,218, 1.75%
- Oil prices flat with Brent crude $83.19 , -0.53%, and US West Texas Intermediate at $76.66 or -0.75%
Fed’s Bullard says markets underestimating chances of higher rates today
Federal Reserve Bank of St. Louis President James Bullard said financial markets are underestimating the chances that policymakers will need to be more aggressive next year in raising interest rates to curb inflation and reiterates view Fed should raise rates to at least 5%
Midweek market data due later this week
A series of key labor market data is due this week, including ADP’s private business payroll figures and job openings on Wednesday, as well as November nonfarm payrolls and unemployment data on Friday.
Analysts will be focusing on jobs data as tight labor market is historically associated with high inflation, and personal spending as they could provide further Federal Reserve intervention.
Spending on Cyber Monday, the biggest U.S. online shopping day, may hit a record $11.6 billion
U.S. shoppers spent a record $9.12 billion online on Black Friday. Analysts are predicting Cyber Monday spending of $11.2 billion to $11.6 billion, an increase of up to 8.5% from a year earlier.
S&P 4,000 level benchmark, today closing down today at 3,964
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. Since the late September lows the index is up about 10.5% today.
U.S. Crude Oil Prices Erase 2022 Gains
Front-month futures contracts for West Texas Intermediate hit $73.60 in Monday morning trading, their lowest level since Dec. 27, 2021; that’s more than 40% off their March 8 close.
Vica Momentum Stock Report
China Automotive Systems NYSE (CAAS) (Grade A) 50 Day Average +41.37%, 100 Day Average +117.45%, 200 Day Average +118.25, YTD +123.13%.
China Automotive Systems is a holding company and has no significant business operations other than their interest in Genesis in which they manufacture power steering systems and other component parts for automobiles.
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 will regain strength
*** Banks will profit from higher interest rates on new loans and other products which will offset defaults
