MARKETS US/Rising market rates push Wall Street into the red | news
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NEW YORK (Dow Jones) — Wall Street is running out of breath on Friday after yesterday’s rally. The reason for this is the renewed significant rise in pension yields. Unexpectedly upbeat US consumers are weighing on the bond market and pushing up market interest rates. The Dow Jones index is down 0.9 percent to 29,774 points by noon EST, while the S&P 500 and Nasdaq Composite are down 1.7 and 2.2 percent, respectively.
In trade, however, it is also said that the previous day’s rally in the aftermath of surprisingly high consumer prices was exaggerated. Now that yields are continuing to rise, a little more realism is returning. This is also promoted by statements by Esther George, President of the US Federal Reserve Bank in Kansas City. She expects interest rates to continue to rise and can even imagine that the final key interest rate will be higher and remain at this level for longer.
“Conditions were ripe for a counter-intuitive move, as we often see this when positioning is biased,” Sundial Capital Research President Jason Goepfert explained of the previous day’s rally.
US banks with quarterly figures in focus
The eagerly awaited annual reports from the major banks for the third quarter do not play a major role in the market as a whole, although most of them are a positive surprise. Higher loan loss provisions, rising costs and losses on securities transactions have caused JP Morgan’s profits to fall significantly. Overall, however, the results were better than analysts had expected. The stock is up 2.7 percent. Wells Fargo earned less and also underperformed market expectations on earnings. However, the increase in income exceeded expectations. The share gained 3.6 percent.
Citigroup (+1.8%) earned significantly less due to higher costs and provisions for loan defaults. However, the result was higher than the market forecasts. Morgan Stanley (-4.4%) earned and took less, mainly due to a slump in investment banking. The result fell short of expectations. Because of the deteriorating market environment, the institutes are currently struggling with collapsing income from IPOs and company mergers. In the lending business, on the other hand, they benefit from the rapid rate hikes by the US Federal Reserve.
Ambiguous consumer data
US consumers are not sending out consistent signals. On the one hand, US consumer sentiment brightened in October. Because the consumer sentiment index calculated at the University of Michigan rose more significantly than expected. On the other hand, retail sales were disappointing, flat in September despite the market betting on a rebound. Import prices show that inflationary pressure is easing, as they fell somewhat more sharply in September than forecast. In view of rising yields, however, this is going under.
Benchmark return over 4 percent
US bonds are coming under pressure as consumer confidence has increased, and yields are turning sharply higher – also fueled by George. The 10-year government bond yield rose 7.5 basis points to 4.02 percent.
Driven by rising market interest rates, the dollar recovered from the previous day’s losses, the dollar index climbed 0.8 percent. The September inflation figures in the US may have reminded some market participants that even the apparently “super-aggressive” course of the Fed could be far too little aggressive, says analyst Ulrich Leuchtmann from Commerzbank.
Rising market interest rates and the firm dollar are affecting the price of gold. Oil prices are giving back their previous day’s gains. Weak retail sales could already herald the beginning of a recession with falling oil demand, they say.
US supermarket chains Kroger and Albertsons merge
After speculation the day before, it’s now official: the US supermarket chain Kroger has announced that it will take over Albertson’s competitor. The transaction values Albertsons at $24.6 billion and is one of the largest in U.S. historyfood industry. Kroger’s shares are down 5.1 percent, Albertson’s down 7.1 percent. While both companies plan to sell overlapping branches to gain regulatory approval, it could be a daunting undertaking, according to BMO Capital Markets analyst Kelly Bania.
The US health insurer Unitedhealth (+1.6%) earned more in the third quarter than analysts had expected despite enormously increased costs. In addition, the profit forecast for the current full year was increased.
INDEX last +/-% absolute +/-% YTD
DJIA 29.774,28 -0,9% -264,44 -18,1%
S&P-500 3,606.95 -1.7% -62.96 -24.3%
Nasdaq-Comp. 10.417,44 -2,2% -231,71 -33,4%
Nasdaq-100 10,785.27 -2.3% -248.31 -33.9%
Term Yield Bp to VT Yield VT +/-Bp YTD
2 years 4.50 +3.0 4.47 376.8
5 years 4.27 +6.4 4.20 300.8
7 years 4.17 +7.8 4.09 272.9
10 years 4.02 +7.5 3.94 250.7
30 years 3.99 +6.9 3.92 209.3
FOREX last +/- % Fri, 8:18 Thu, 17:01 % YTD
EUR/USD 0,9733 -0,4% 0,9789 0,9715 -14,4%
EUR/JPY 144.71 +0.6% 144.29 143.19 +10.6%
EUR/CHF 0.9777 -0.1% 0.9764 0.9961 -5.8%
EUR/GBP 0,8694 +0,8% 0,8651 0,8646 +3,5%
USD/JPY 148,67 +1,0% 147,43 147,39 +29,2%
GBP/USD 1,1192 -1,2% 1,1315 1,1237 -17,3%
USD/CNH (Offshore) 7,2193 +0,6% 7,1723 7,2159 +13,6%
BTC/USD 19.342,55 -0,3% 19.790,69 18.408,28 -58,2%
CRUDE OIL last VT settlem. +/- % +/- USD % YTD
WTI/Nymex 86,00 89,11 -3,5% -3,11 +22,2%
Brent/ICE 91,92 94,57 -2,8% -2,65 +24,9%
GAS VT-Settlem. +/- EUR
Dutch TTF 141,75 153,81 -7,8% -12,06 +136,9%
METALS last day before +/- % +/- USD % YTD
Gold (Spot) 1.644,79 1.666,30 -1,3% -21,51 -10,1%
Silver (Spot) 18.18 18.89 -3.8% -0.71 -22.0%
Platinum (Spot) 894.65 897.95 -0.4% -3.30 -7.8%
Kupfer-Future 3,43 3,46 -0,7% -0,03 -22,5%
YTD relative to previous day’s close
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(END) Dow Jones Newswires
October 14, 2022 12:40 PM ET (4:40 PM GMT)
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