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The market is worried that the Fed has raised interest rates too much, leading to a recession and the Dow fell below 30,000 points | Anue Juheng- US stocks

The market is worried that the Fed has raised interest rates too much, leading to a recession and the Dow fell below 30,000 points | Anue Juheng- US stocks
The market is worried that the Fed has raised interest rates too much, leading to a recession and the Dow fell below 30,000 points | Anue Juheng- US stocks

Investors worried that the Federal Reserve’s aggressive interest rate hikes to fight inflation will lead to a recession. The major US stock indexes opened lower on Friday (23rd), and the Dow Jones Industrial Average fell below 30,000 points.

Before the deadline, the Dow Jones Industrial Average fell nearly 400 points or nearly 1.3%, the Nasdaq Composite fell nearly 200 points or nearly 1%, the S&P 500 fell nearly 1.7%, and the Philadelphia Semiconductor Index fell more than 2%.

In order to stimulate domestic demand and save an economy teetering on the brink of recession, the British government has launched a tax cut worth 45 billion pounds, including canceling plans to increase corporate tax to 25%, abolishing the top tax rate of 45%, and slashing stamp duty. and many more.

The tax cuts are said to be larger than those introduced in 1988 under the “Iron Lady” Margaret Thatcher, and are the largest in half a century.

British government bonds fell sharply and the pound fell to a fresh 37-year low as markets priced in a more aggressive pace of tightening in Britain to offset fiscal stimulus. At the same time, the U.S. dollar index hit a new high, and the U.S. 10-year Treasury yield climbed to a more than 10-year high.

While the U.S. dollar continued to rise and markets expected the Fed to further tighten interest rates by 1.25 percentage points by the end of the year, a surprise rate cut by Turkey’s central bank pushed the lira to a record low, its biggest weekly drop in 23 years.

Goldman Sachs cut its year-end target for the S&P 500 to 3,600 from 4,300, citing the Federal Reserve’s higher rate hike path. On the other hand, strategists have given up their expectations for a year-end rally in European stock markets, as the Eurozone’s Markit Manufacturing Purchasing Managers Index (PMI) reported 48.5 in September, lower than the expected 48.7 and the previous value of 49.6.

Goldman Sachs also said that the outlook for U.S. stocks is “very uncertain”, with inflation, economic growth, interest rates, earnings and valuations all changing, and most stock investors believe a hard landing is “inevitable.” The bank also noted that in the short term, investors’ focus will shift from interest rate concerns to corporate earnings.

In terms of data, the initial value of the Markit manufacturing PMI in the United States in September was 51.8, which was better than market expectations of 51.1, and the previous value was 51.5. The initial value of PMI was reported at 49.3, which was better than the previous value of 44.6.

As of 21:00 on Friday (23rd) Taipei time:
S&P 500 daily chart. (Picture: Juheng.com)
Stocks in focus:

FedEx (FDX-US) fell 2.19% to $151.16 a share in early trade

FedEx (FedEx) on Thursday announced that its revenue and profit in the last quarter were not as good as expected. It also announced that the package shipping fee for most services will increase by an average of 6.9% in January next year, and it will implement cost-saving measures this year, hoping to save money. The next $2.3 billion to $2.7 billion cost. The company’s Express, Ground and Home Delivery services will increase package rates by an average of 6.9%, and Freight services will see an average increase of 6.9% to 7.9%.

Boeing (BA-US) fell 2.39% to $135.39 a share in early trade

Boeing will pay $200 million and then-CEO Dennis Muilenburg $1 million as a settlement for allegedly misleading investors after two 737 Max crashes, the U.S. Securities and Exchange Commission (SEC) said on Thursday. Neither Boeing nor Muilenburg has admitted nor denied its findings, the SEC said.

Qualcomm (QCOM-US) fell 3.34% to $119.56 a share in early trade

Qualcomm announced at its inaugural Automotive Investor Conference that thanks to the widespread adoption of Snapdragon digital chassis solutions in the automotive industry, the total order book for its automotive business has grown to $30 billion. This growth represents a more than $10 billion expansion in the total valuation of Qualcomm’s automotive business orders since it reported its fiscal 2022 third-quarter earnings.

Today’s key economic data:

U.S. September Markit manufacturing PMI initial value was 51.8, expected 51.1, the previous value was 51.5

U.S. September Markit services PMI initial value was 49.2, expected 45, the previous value was 43.7

U.S. September Markit Composite PMI initial value was 49.3, the previous value was 44.6

Wall Street Analysis:

“There’s been very little positive news right now, and this sentiment could eventually spark some level of selling … we’re definitely close to near-term lows,” said Rick Meckler, a partner at Cherry Lane Investments.

“A recession in the euro zone is likely as companies’ business conditions deteriorate and price pressures related to soaring energy costs increase,” said Chris Williamson, chief business economist at S&P Global. “Preliminary PMI data suggest the economy will shrink by 0.1 in the third quarter. %.”

Bank of America Securities strategist Michael Hartnett called the current bond crash “the third great bond bear market,” calling the situation “extremely dire.” He said a bond collapse would threaten credit events and the settlement of global transactions, including those in the U.S. dollar, U.S. tech stocks, private equity and more.


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