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October 2, 2024
DOW: 42,426
S&P: 5756
Nasdaq: 20,009
10YR T-Note: 3.79%
Bitcoin: 60,880
VIX: 19,26
Gold: $2672
Crude Oil: $71,90
Prices Current as of 08:53 am
Source: CNBC
Don Selkin, the creator and innovator of the "Fair Value" numbers, as its Chief Market Strategist on the Newbridge platform has given CNBC and its Predecessor, these numbers every day for the over 40 years - never missing a single day, as well as given the fair value for the Nasdaq 100 futures since their introduction in 1996 and the Dow Jones stock index futures since 1997. Mr. Selkin has also been quoted in several publications including but not limited to Bloomberg News, New York Post, Reuters, and The New York Times. Mr. Selkin's Fair Value numbers are included in the U.S.
Futures Report broadcast on CNBC every day before the market
opens attributing "Newbridge Securities" as the source. In addition, NSC provides to its professionals, their clients and the public access to Don Selkin's more in depth financial market views.
After a third-quarter which showed the Dow and S&P at all-time highs, the market went into a bad retreat to start the first day of the fourth-quart yesterday, and it looks like things can remain choppily bouncing around until this Friday’s September jobs report and then the start of the third-quart earnings season later in this month.
Equities retreated from their records Tuesday after missiles were fired from Iran into Israel, a sharp escalation of tensions in the Middle East that investors fear could lead to disruptions in the flow of oil.
The Dow ended 133 points lower down to 42,156 on selling in AAPL, which had done better lately, MSFT which has done poorly, and financials GS and JPM. The S&P gave back 53 down to 5790 on those weaker large technology issues while the Nasdaq did the worst with a 279 point drubbing to 17,910.
The Russell 2000 Index of small stocks dropped by a large 33 points to 2197 while the VIX really felt the upside motion and ended at 19.26 as it approaches the 20 and over resistance area.
Oil prices jumped amid speculation about how Israel and the United States may respond to the Iranian incursion. White House National Security Adviser Jake Sullivan called Iran’s missile attack a “significant escalation,” although he said it was ultimately “defeated and ineffective.”
While Israel is not a major producer of oil, Iran is, and the potential for a wider conflict could affect other, neighboring producers of crude. The price for a barrel of benchmark U.S. crude rose 2.4% to settle at $69.83. Brent crude, the international standard, rallied 2.6% to $73.56 per barrel.
That in turn sent shares of oil-and-gas producers to some of the stock market’s biggest gains. COP and XOM both made sharp advances.
Shares of defense contractors also rallied. NOC 3%, and RTX added 2.7%. RTX partners with Israeli company Rafael Advanced Defense Systems to make the “Iron Dome” air defense system that Israel’s government uses.
Fighting in the Middle East has the attention of investors as the two largest stocks, namely AAPL and MSFT, both fell at least 2.2%, while the smallest U.S. stocks that make up the Russell 2000 index dropped 1.5%.
Stocks are vulnerable as we are at all-time highs, and valuations are stretched prior to the election, observed one commentator.
The all-time high that the S&P set on Monday was its 43rd of the year so far. Stocks had been jumping on hopes the U.S. economy can continue to grow despite a slowdown in the job market as the Federal Reserve cuts interest rates. The Fed last month lowered its main interest rate for the first time in more than four years, and it indicated it will deliver more cuts through next year.
The dominant question is whether the cuts will ultimately prove to be too little, too late after the Fed earlier kept rates at a two-decade high in hopes of breaking on the economy enough to stamp out high inflation.
A discouraging report arrived Tuesday, showing U.S. manufacturing weakened by more in September than economists expected. Manufacturing has been one of the areas of the economy hurt most by high interest rates, and the report from the Institute for Supply Management said demand continues to slow.
A separate report was potentially more encouraging. It showed U.S. employers were advertising more than 8 million job openings at the end of August. That was slightly more than July’s number and better than what economists were expecting. A more comprehensive report on hiring will arrive on Friday, when the U.S. government details how many jobs U.S. employers created in September.
Besides the job market, another threat to the economy could lie in the strike by dockworkers at 36 ports across the eastern United States. It could snarl supply chains and drive up inflation if it lasts a while.
The workers are asking for a labor contract that doesn’t allow automation to take their jobs, among other things. So far, financial markets have taken the strike in stride. Supply chain experts say consumers won’t see an immediate impact from the strike because most retailers stocked up on goods, moving ahead shipments of holiday gift items.
In the bond market, the yield on the 10-year Treasury fell to 3.73% from 3.79% late Monday. Yields fell after worries about the Middle East drove investors into Treasurys, gold and other investments seen as safer.
Yields had already been easing worldwide beforehand, following an encouraging update on inflation from Europe. Inflation among the 20 countries that use the euro currency came in below 2% in September, the first time that happened in more than three years. The slowdown could give the European Central Bank leeway to cut interest rates more quickly.
European stocks indexes initially swung higher following the inflation update, only to fall to losses. Indexes dropped 0.8% in France and 0.6% in Germany.
Farther east, a quarterly “tankan” survey by the Bank of Japan showed more large manufacturers feeling optimistic about business conditions than pessimistic. Japan also reported that its unemployment rate for August fell to 2.5% from 2.7% in July, in line with market expectations.
Japan’s benchmark Nikkei 225 rallied 1.9% to claw back some of its steep 4.8% loss from the day before.
Markets in China and South Korea were shut for holidays. Mainland Chinese markets, which had their best day since 2008 on Monday, will remain closed until October 7th for the National Day break.
Earnings this week have shown the following: Earnings reports showed that CCL and Stellantis were lower yesterday; today – Dow component NKE lower and – CAG; Thursday – STZ.
