U.S. MARKETS:
TRICK OR TREAT! THE FULL MOON ON THE 28TH AND WALL STREET MINI-PANICS MAY GO ALL TOGETHER. COVERED INDEX SHORT AND WATCHING.
SPX HIT LOWER BAND SUPPORT ON THURSDAY IN A MIDST OF PANIC, ESPECIALLY ON NASDAQ. THIS IS NOT A BULLISH CHART BUT PERHAPS WE GET A BOUNCE
The major averages staged a recovery attempt in the latter part of the session but moved back to the downside going into the close. The Nasdaq tumbled 225.62 points or 1.8 percent to 12,595.61, the S&P 500 climbed 49.54 points or 1.2 percent to 4,137.23 and the Dow slid 251.63 points or 0.8 percent to 32,784.30.
A negative reaction to quarterly results from Meta Platforms (META) weigh on the Nasdaq, with the Facebook parent plunging by 3.7 percent despite reporting third quarter results that exceeded analyst estimates on the top and bottom lines.
The weakness on Wall Street also came following the release of a slew of largely upbeat U.S. economic data, including a Commerce Department report showing GDP soared by more than expected in the third quarter of 2023.
The Commerce Department said GDP spiked by 4.9 percent in the third quarter after jumping by 2.1 percent in the second quarter. Economists had expected GDP to surge by 4.2 percent.
The stronger than expected GDP growth partly reflected a surge in consumer spending, which soared by 4.0 percent in the third quarter after climbing by 0.8 percent in the second quarter.
The resilience of the U.S. economy added to recent concerns about the Federal Reserve leaving interest rates higher for longer than investors had hoped.
“The Fed will see the third quarter’s surge in GDP as evidence that the economy is robust, and that restrictive interest rates continue to be appropriate near-term,” said Bill Adams, Chief Economist for Comerica Bank.
He added, “That means that the Fed will be on hold for a while even if inflation slows further near-term—and with gas prices down sharply in October, the next CPI report will probably be a cool one.”
The Commerce Department also released a report showing new orders for U.S. manufactured durable goods spiked by much more than expected in the month of September.
The report said durable goods orders soared by 4.7 percent in September following a revised 0.1 percent dip in August.
Economists had expected durable goods orders to jump by 1.5 percent compared to the 0.1 percent uptick that had been reported for the previous month.
Excluding orders for transportation equipment, durable goods orders climbed by 0.5 percent in September, matching the increase in August. Ex-transportation orders were expected to rise by 0.2 percent.
Meanwhile, the Labor Department released a report showing first-time claims for U.S. unemployment benefits edged higher in the week ended October 21st.
The report said initial jobless claims rose to 210,000, an increase of 10,000 from the previous week’s revised level of 200,000. Economists had expected jobless claims to rise to 208,000 from the 198,000 originally reported for the previous month.
Sector News
Computer hardware stocks saw considerable weakness on the day, with the NYSE Arca Computer Hardware Index tumbling by 2.5 percent to a nearly five-month closing low.
Shares of Western Digital (WDC) moved sharply lower after a report from the Nikkei newspaper said the company and Japan’s Kioxia Holdings have called off merger talks.
Significant weakness was also visible among software stocks, as reflected by the 2.5 percent slump by the Dow Jones U.S. Software Index.
Oil service stocks also came under pressure amid a steep drop by the price of crude oil, dragging the Philadelphia Oil Service Index down by 2.3 percent.
The sell-off by oil service stocks comes amid a steep drop by the price of crude oil, with crude for December delivery tumbling $1.67 to $83.72 a barrel.
Transportation and pharmaceutical stocks also saw notable weakness, while commercial real estate, financial and housing stocks bucked the downward trend.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan’s Nikkei 225 Index dove by 2.1 percent, while South Korea’s Kospi plummeted by 2.7 percent.
The major European markets also moved to the downside on the day. While the German DAX Index slumped by 1.1 percent, the U.K.’s FTSE 100 Index slid by 0.8 percent and the French CAC 40 Index fell by 0.4 percent.
In the bond market, treasuries moved notably higher despite the upbeat U.S. economic data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled 10.8 basis points to 4.845 percent.
Looking Ahead
The Commerce Department’s report on personal income and spending in September is likely to be in focus on Friday, as it includes readings on inflation said to be preferred by the Federal Reserve.
Trading may also be impacted by reaction to the latest earnings news, with Amazon (AMZN) and Intel (INTC) among the companies releasing their quarterly results after the close of today’s trading.
Energy giants Chevron (CVX) and Exxon Mobil (XOM) are also among the companies due to report their results before the start of trading on Friday.
At UN, Iran Warns US Will ‘Not Be Spared’ if War Continues
“I say frankly to the American statesmen, who are now managing the genocide in Palestine, that we do not welcome [an] expansion of the war in the region. But if the genocide in Gaza continues, they will not be spared from this fire,” he told the United Nations General Assembly.
Is China Selling U.S. Assets To Buy Gold? – FX Empire
Chinese investors seem to be the first ones to see the writing on the wall, dumping US assets to buy gold. Is this in support of their currency? Or are there geopolitical strategies being employed?
by Vladimir Zernov
According to the recent data from U.S. Treasury, Chinese investors sold $21.2 billion of U.S. assets in the month of August.
While Fed policy outlook was the biggest driver behind the sell-off in Treasuries, it looks that China’s activity contributed to the move that pushed the yield of 30-year Treasuries towards 5.00%.
I have recently written that high Treasury yields may serve as an additional bullish catalyst for gold. Traders are searching for safe-haven assets due to geopolitical tensions. Treasuries are considered to be among the safest assets in the world, but their price is falling for months, and some investors may choose to buy gold.
Chinese investors may be among the first ones to direct their funds to gold markets. There are two main theories about the reasons of China’s rapid selling of U.S. assets.
First, China needs to support the local currency, yuan. The country’s currency settled near multi-year lows against the U.S. dollar as investors focused on the problems of China’s economy. Selling dollar-denominated assets to provide support to yuan makes perfect sense. If China is selling U.S. assets to prop up its local currency, gold will get limited support.
Is RFK Jr. Trump’s “Secret Weapon” in 2024? – Wayne Allen Root
I’ve argued for many months now that Robert F. Kennedy Jr. is right about three things – the Covid vaccine, the funding of the Ukraine war, and the Deep State. I like him. He’s a good guy – for a Democrat. He has integrity – for a Democrat.
Most importantly, he’s not your typical Democrat – meaning he’s not a communist traitor. He doesn’t want to destroy America. And that’s why the Democrat leadership hates him. RFK Jr. has been shunned by his own party. He’s a pariah in the party of radical America-hating Marxists like Obama, Biden, Kamala, Hillary, Pelosi, Kerry and Soros.
https://www.howestreet.com/2023/10/will-the-plunge-protection-team-boost-stock-markets-mark-leibovit/
Mark Leibovit’s Market Forecast for the Major Markets
https://tinyurl.com/5acyxmup
Buy bonds & gold, be underweight equities: JPMorgan strategist -Yahoo! Finance
JPMorgan’s Chief Global Markets Strategist Marco Kolanovic is all in on Safe Haven Investments as tensions in the Middle East heat up. Now, in a note to clients, Kolanovic reiterated that he is underweight equities and recommended buying bonds and gold, saying, quote, “While it remains uncertain whether bonds have bottomed, we add back 1% to our government bond allocation given geopolitical risk, cheap valuations, and less pronounced positioning.”
So not necessarily anything new that we’re hearing from Marco Kolanovic. But again, just a warning here to the Street just in terms of what exactly the next couple of months could look like when we talk about the pressure that we could potentially see on equities. We’ve seen many strategists here rein in some of their year end price targets for the S&P, what that looks like going into 2024 and how this all plays out. Obviously, a huge issue for investors. And we’re seeing that reflected from some of these analyst calls on the Street.
The S&P 500 is in a historic bubble and could crash by 63%, markets guru John Hussman warns -Business Insider
The S&P 500 is poised to drop 63%; this according to market guru John Hussman. Overvalued markets, coupled with a cracking economy, make this no surprise to many; however, it seems many investors think the party can keep raging. This “reckless speculation” may ultimately be their undoing.
by Theron Mohamed
franklin”Market valuations stand at one of the three great bubble extremes in US history,” rivaling the peaks of 1929 and 2000, the veteran investor and financial historian said in his latest research note. Those two previous periods of reckless speculation ended disastrously, and the current bubble is likely to unwind in similar fashion, he added.
The Hussman Investment Trust president based his bleak outlook on an analysis of stock-market returns over the last century or so. He cautioned that virtually every market cycle in history has ended with projected S&P 500 total returns returning to historical norms.
“At present, that would require a market loss on the order of -63% in the S&P 500,” he wrote, raising the prospect that the benchmark stock index could fall to around 1,600 points, its lowest level since 2013.
“That’s not a forecast, but it certainly is a historically-consistent estimate of the potential downside risk created by more than a decade of Fed-induced yield-seeking speculation,” he continued. “Buckle up.”
The war in Ukraine, along with the unprecedented attacks in Israel by Palestinian militant group Hamas last weekend, may have “far-reaching impacts on energy and food markets, global trade and geopolitical relationships,” Dimon said in a statement accompanying the bank’s third-quarter earnings release. “Thismay be the most dangerous time the world has seen in decades,” Jamie Dimon said. – Megan Henney, “JPMorgan CEO Jamie Dimon warns: ‘This May be the Most Dangerous Time the World has seen in Decades’: Sounds Alarm over Economic Outlook Amid Israel-Hamas War,” www.foxbusiness.com,
October 13, 2023.
Billionaire investor Ray Dalio said there’s a 50-50 chance a world war will break out in light of the Israel-Hamas conflict.
“In my opinion, this war has a high risk of leading to several other conflicts of different types in a number of places, and it is likely to have harmful effects that will extend beyond those in Israel and Gaza,” Dalio wrote in an essay titled “Another Step Toward International War,” which he posted Thursday on LinkedIn.
“Primarily for those reasons, it appears to me that the odds of transitioning from the contained conflicts to a more uncontained hot world war that includes the major powers have risen from 35% to about 50% over the last two years.”
https://tinyurl.com/3mfhf7zf
What about the January Barometer?
The January Barometer calls for a positive year-end outcome, but a lot can happen between now and then. Please check with previous editions discussing the calculation of the Barometer.
https://tinyurl.com/2rd9wv52
OPPORTUNITY TO ACCESS MARK LEIBOVIT’S PROPRIETARY VOLUME REVERSAL INDICATOR – THIS IS THE ONLY PLACE TO DO IT!
https://www.metastock.com/
COME ON, DAD. IT’S TIME TO EAT
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