Daily Markets: Markets continue to react to latest rate hike

today’s big picture

The Asia-Pacific Equity Index ended today’s session as global central bank panic and bearish fears dominated investor sentiment this week. China’s Shanghai Composite fell 0.66%, Taiwan’s TAIEX and Hong Kong’s Hang Seng fell 1.16% and 1.18%, respectively, while India’s Sensex closed 1.73% and South Korea’s KOSPI down 1.81%. Australia’s ASX All Ordinaries led, down 1.92% on overall market weakness led by the names of technology and consumer services. Markets in Japan are closed today to mark the autumn equinox as we officially transition to fall. As of mid-trade, European equity indices are down across the board and US futures point towards a broad open late this morning.

As we close out another turbulent week for equities characterized by rising concerns, the Federal Reserve may go ahead with its plan to return inflation to its 2% target, with falling expectations for the economy and earnings. Investor sentiment has worsened amid Meanwhile, higher interest rates will impact valuations of both the stock market and individual equities. So far Goldman Sachs cut its target for the S&P 500 to 3,600 and Bank of America forecast the S&P 500 to trade between 3,300 and 3,500.

These and other revised forecasts will further impact investor sentiment, which is bullish in favor of cash versus bonds and stocks, as reported by global equity funds of $7.8 billion in cash versus $7.8 billion for the week ended September 21. as evidence of cash flow. And with the CNN Money Fear and Greed Index registering “fear”, there is more room to fall into “extreme fear”. As we transition from the Fed’s September monetary policy meeting results to September’s earnings season, sentiment could give way to a “show me” mood for stocks as investors brace for weaker-than-expected guidance.

data download

international economy

The S&P Global Eurozone Flash Manufacturing PMI fell from 49.6 in August to 48.5 in September, with no consensus at 48.7. This is the third consecutive contraction in factory activity and the biggest contraction since June 2020. Flash Services PMI for September fell to 48.9 in September versus 49.8 in August and 49.0 with the report consensus showing that both input and output cost inflation has accelerated. ,

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The S&P Global/CIPS UK Flash Manufacturing PMI rose to 48.5 in September, up from 47.3 in the previous month and exceeded market expectations of 47.5. However, the data was still well below the expansion-contraction line of 50 and new orders continued to show weakness. The September Flash Service PMI fell to 50.9 versus 49.2 in August and an expected reading of 50. According to the report, the slowdown reflected a living crisis and growing economic uncertainty.

EU members are looking to an eighth round of sanctions against Russia, following Russian President Vladimir Putin’s call for “partial mobilization”. Signs point to an investigation into a number of measures, however, the key to any next step will be consensus among the 27 EU member states.

domestic economy

At 9:45 a.m. ET, S&P Global (SPGI) will publish its Flash September Manufacturing and Services PMI, and we’re very skeptical of the headline figures and underlying details as the Atlanta Fed’s GDPNow model for the current quarter and the Fed’s recent size will be given. Updated economic forecast. The latest for those respective data sets is 0.3% of GDP in the current quarter and 0.2% for all of 2022.

At 2 p.m. ET, Fed Chair Powell will provide opening remarks for a Fed Licensing event titled Transition to a Post-Transition Economy. Vice Chairman Lyle Brainard and Governor Michelle W. Bowman will hold moderate talks with leaders from organizations involved in nonprofits, small businesses, manufacturing, supply chain management, the hospitality industry, and the housing and education sectors. So following the Fed’s latest monetary policy meeting on Wednesday and Powell’s comments shortly after the meeting, we highly doubt there will be any backlash from those comments, especially given the sparse data that has taken place over the past 48 hours.

The US Senate will vote on Tuesday, September 27, on a motion to continue funding the government until December 16.

Pfizer (PFE) and the US government agreed to reduce the number of COVID-19 vaccines, with the US government donating 1 billion to 600 million doses to other countries this year.

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Bloomberg reports that California is committed to a plan that would make it the first US state to phase out gas-fueled furnaces and water heaters in homes.

Market

Markets continue to react to the latest rate hike and Chairman Powell’s post announcement comments as the Dow is down 0.35%, the S&P 500 is down 0.85%, the Nasdaq is down 1.37% and the Russell 2000 is down 2.26%. Investors price in the long-term effects of higher rates on new company growth and existing company expansion plans. The only positive sector was healthcare as Eli Lilly (LLY) grew 4.85% on a new FDA approval for a new lung cancer treatment and Merck & Company (MRK) grew 3.53% as they launched Phase 2 of a new melanoma drug. Testing expanded. Here’s how the key market indicators stack up from year to year:

Dow Jones Industrial Average: -17.23% S&P 500: -21.15% Nasdaq Composite: -29.26% Russell 2000: -23.29% Bitcoin (BTC-USD): -28.21% Ether (ETH-USD): -64.04% Stocks to watch

Neither company is expected to report its latest quarterly results and guidance prior to the commencement of trading for US-listed equities.

Costco Wholesale (COST) reported August quarter earnings of $4.20 per share, a few paise ahead of the consensus of $4.17. Revenue for the quarter also topped consensus expectations, coming in at $72.09 billion versus $72 billion. Comparable sales for the quarter, excluding the effects of changes in gasoline prices and foreign currency, increased 10.4% with comps sales in the US up 9.6%, besting the 9.3% consensus forecast. E-commerce grew 8.4% on an adjusted basis. Exiting the quarter, Costco is operating 838 warehouse locations and targets to open 29 new warehouses versus 23 net new locations in the past 12 months.

Shares of Qualcomm (QCOM) traded down yesterday, despite CEO Cristiano Amon sharing that its design-win pipeline has climbed to $30 billion, up from the $19 billion figure it shared last time.

American Public Education (APEI) issued inline guidance with a consensus of $605.7 million in fiscal year 2022 with revenues of $600-$610 million.

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IMAX (IMAX) has acquired SSIMWAVE Inc. Ltd., a leader in AI-powered video quality solutions for media and entertainment companies.

Apple (AAPL) signed a multi-year deal with the National Football League to sponsor the Super Bowl halftime show, which began with the American Football Championship game in February 2023.

IPO

Readers interested in learning more about the upcoming IPO calendar should visit Nasdaq’s Latest and Upcoming IPOs page.

After today’s market close

No company is expected to report its quarterly results after the close of trading today. As we near the end of the quarter, readers should keep an eye on both positive and negative pre-announced earnings. Going over the Nasdaq’s earnings calendar, they’re looking for more that companies are reporting on.

on the horizon

Monday, September 26

Germany: 3Q 2022 GDP (initial) Germany: Business expectations – September

Tuesday, September 27

China: Industrial Gains – August US: Durable Orders – August US: FHFA Housing Price Index – July US: S&P Case-Shiller Home Price Index – July US: Consumer Confidence – September US: New Home Sales – August

Wednesday, September 28

Germany: GFK Consumer Climate – October US: Weekly MBA Mortgage Application US: Pending Home Sales – August US: Weekly EIA Crude Oil List

Thursday, September 29

UK: BOE Consumer Credit – August Eurozone: Business and Consumer Survey, Consumer Confidence, Consumer Inflation Expectations – September Germany: CPI – September (Preliminary) US: Weekly Initial and Continuous Jobless Claims US: 2Q 2022 GDP – Third Estimate US: Weekly EIA natural gas inventory

Friday, 30 September

Japan: Retail sales – August China: Manufacturing and non-manufacturing PMI – September China: Caixin manufacturing PMI – September Germany: Import/export prices, Retail sales – August Eurozone: Consumer price index – September US: Personal income and expenditure – August US : PCE Price Index – August US : Chicago PMI – September US : University of Michigan Consumer Sentiment (Final) – September Thought for the Day

“Don’t sell yourself short.” ~ Bruce Springsteen

Disclosures

The views and opinions expressed here are the views and opinions of the author and do not necessarily represent those of Nasdaq, Inc.

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