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October 8, 2024
DOW: 42,033
S&P: 5,743
Nasdaq: 18,154
10YR T-Note: 4.02%
Bitcoin: 62,343
VIX: 21.29
Gold: $2,630.80
Crude Oil: $73.65
Prices Current as of 11:51 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 solid month of September, the first higher one in five years that ended last Monday, things got hit by the old “High tech is High wreck” syndrome unfortunately making its presence felt again yesterday.
As a result, the Dow took the worst of the hit with a large 398 point decline down to 41,954 led by large selling in AAPL, CRM, MCD, MSFT, TRV and UNLV. The S&P got clobbered for 55 down to 5695 and it was hurt by some huge shellacking in AAPL, AMZN, MSFT, NFLX and META which had made an all-time high on Friday. The Nasdaq also got destroyed with a large 214 point collapse to 17,924 led by the likes of the ones just mentioned plus recently pathetic TSLA ahead of its widely anticipated robotaxi from this company on Wednesday and we shall see how this one goes. The Russell 2000 Index of small stocks also did poorly with a 19 point drop to 2193 and the VIX shot back up to 22.64 on a combination of Middle East concerns and the overall shellacking that the market took.
This is a stall for U.S. stocks after they rallied to records on relief that interest rates are coming back down now that the Federal Reserve has widened its focus to include keeping the economy humming instead of just dealing with inflation. Friday’s blowout report on U.S. jobs raised optimism about the economy and hopes that the Fed can pull off a perfect landing for it.
But Friday’s jobs report was so strong that it also forced traders to ratchet back forecasts for how much the Fed will ultimately cut interest rates by. That in turn has sent Treasury yields higher, and the 10-year yield is back above 4% for the first time since August.
The 2-year Treasury yield also briefly climbed back above 4% Monday, up from 3.50% a couple weeks ago which is a sizeable move for the bond market, and it can drag on prices for stocks and all kinds of other investments.
When Treasury bonds, which are seen as the safest possible investments, are paying more in interest, investors become less inclined to pay very high prices for stocks and other things that carry bigger risk of losing money.
Monday’s sharpest losses hit stocks of utility companies. These kinds of stocks tend to pay big dividends, which means they can see potential buyers leave when bonds are paying more in interest.
Utilities fell 2.3% for the sharpest loss among the 11 sectors that make up the S&P index.
It is more difficult to look attractive to investors seeking income when a 10-year Treasury is paying a 4.02% yield, up from 3.97% late Friday and from 3.62% three weeks ago.
The yield on the two-year Treasury, which more closely tracks expectations for the Fed, jumped more on Monday. It rose to 3.99% from 3.92% late Friday.
Treasury yields may also be feeling upward push from the recent jump in oil prices. Crude prices have been spurting higher on worries that worsening tensions in the Middle East could ultimately lead to disruptions in the flow of oil.
Brent crude, the international standard, rose another 3.7% Monday to settle at $80.93 per barrel. Benchmark U.S. crude, meanwhile, also gained 3.7%, to $77.14 per barrel.
Stocks that are seen as the most expensive can feel the most downward pressure from higher Treasury yields, and the spotlight has been on Big Tech stocks. They drove the majority of the S&P returns in recent years and soared to heights that critics called overdone.
An exception was NVDA, which rose another 2.3%. It rode another upswell in excitement about artificial-intelligence technology after SMCI soared by 16% after saying it recently shipped more than 100,000 graphics processing units with liquid cooling.
If Treasury yields keep rising, companies will likely need to deliver bigger profits to drive their stock prices much higher, and this week marks the start of the latest corporate earnings reporting season.
Analysts say earnings per share grew 4.2% during the summer for S&P companies from a year earlier, led by technology and health care companies, according to FactSet. If those analysts are correct, it would be a fifth straight quarter of growth.
In stock markets abroad, European indexes were mixed following bigger gains in Asia.
Japan’s Nikkei 225 index rose 1.8% after the value of the yen sank against the U.S. dollar. A weaker yen can boost profits for Japanese exporters.
Stock markets in mainland China will reopen today from a weeklong holiday, and the government said it plans to explain details of plans for economic stimulus at a morning news conference in Beijing.
The third-quarter earnings season begins this week with the following: today – PEP lower; Thursday – BLK, JPM, WFC.
Economic reports will have: today – August trade deficit came in slightly above $70 billion; Thursday – September C.P.I., weekly jobless claims; Friday – September P.P.I., U. of Michigan mid-October Consumer Sentiment Survey.
