October Richmond Fed Manufacturing Index up to -14 vs. -17 est. & -21 in prior month; new orders, shipments, and employment all moved up but remained in contraction … wages stayed in expansion and improved vs. prior month pic.twitter.com/0RT4d1bEpO
— Liz Ann Sonders (@LizAnnSonders) October 22, 2024
US stocks recovered from session lows but finished the day mixed as investors digested a recent bond market sell-off and the next wave of earnings reports. The S&P 500 and Dow Jones Industrial Average closed just below the flatline, while the tech-heavy Nasdaq Composite ticked up around 0.2%. It was the first back-to-back negative days for the S&P 500 since Sept.
6.
As often observed when rates are rising, value has outperformed growth in many major markets MTD, including U.S. mid and small caps, Canada, Australia, Europe and Japan; S&P 500 and S&P Emerging BMI bucked trend
@SPDJIndices pic.twitter.com/kFQC9EluNk— Liz Ann Sonders (@LizAnnSonders) October 22, 2024
Stocks are treading carefully amid concerns that the Federal Reserve will continue to cut rates aggressively or even hold steady in November. Strength in the economy and concerns about the fiscal impact of an election win by Republican nominee Donald Trump are factors in play.
Amid the uncertainty, the 10-year Treasury yield steadied around 4.2% after a recent rise.
JPM DESK, on rising yields:
“.. while it may be tempting to initiate duration longs at these levels, we remain neutral as we are cognizant that technical dynamics, the lack of first-tier data which can change market’s Fed expectations, and the approaching election all point… pic.twitter.com/vKyr4f8P7O
— Carl Quintanilla (@carlquintanilla) October 22, 2024
The bond selling has weighed on rate-sensitive stocks such as real estate, with rising yields typically a catalyst for stock drawdowns. On the earnings front, General Motors raised its guidance for the third time this year as upbeat EV sales helped deliver a strong quarterly performance.
GM shares closed up more than 10%. Elsewhere in earnings, GE Aerospace sank over 8%, and Verizon shares fell around 5% on mixed third-quarter reports. Despite higher yields, gold secured another record high as investors sought safety with the US presidential election looming and Middle East tensions still on the rise.
McDonald’s shares sank around 10% in after-hours trading on Tuesday after the Centers for Disease Control and Prevention (CDC) linked the company’s Quarter Pounders to an E. coli outbreak in some states, with most illnesses in Colorado and Nebraska. McDonald’s has stopped using fresh slivered onions and quarter-pound beef patties in certain states while the source of illness is confirmed.
Starbucks pre-announced its earnings results, revealing weaker-than-expected performance.
Stocks mixed amid stabilizing bond yields
The announcement has sent ripples through investor circles as they brace for detailed reports.
Walmart announced on Tuesday it will offer same-day prescription delivery services in six states, with plans to roll out to all 49 states in which it operates a pharmacy by January. The first six states to receive this service are Arkansas, Missouri, New York, Nevada, South Carolina, and Wisconsin. Trump Media & Technology Group stock hit its highest level since July on Tuesday, rising as much as 10% as investors bet on former President Donald Trump’s improved odds of winning the November election in two weeks.
Shares have been volatile, their fortunes often tied to the news cycle and changing political landscapes. Energy, Consumer Staples, and Real Estate led Tuesday’s sector action, with markets retreating for their second straight session as traders priced in a “higher for longer” policy stance from the Federal Reserve. Oil prices were a standout, with WTI crude rising about 3% to trade above $72.50 a barrel.
Brent crude, the international benchmark, rose more than 2% to trade just above $76 a barrel. Information Technology, Materials, and Consumer Discretionary served as the day’s biggest laggards. The International Monetary Fund stated that the global economy is on pace for a soft landing this year and 2025 but elections around the world introduce a “high” level of uncertainty to that outlook due to potential changes in trade and fiscal policy.
General Motors stock rose more than 7% on Tuesday morning as the automaker boosted its profitability guidance for the third time this year. For the quarter, GM reported revenue of $48.78 billion, easily topping estimates of $44.69 billion. GM’s Q3 revenue was also 10.5% higher than a year ago.
The company booked adjusted earnings per share of $2.96. Overall, markets are debating a “higher for longer” interest rate stance from the Fed, as Treasury yields have spiked amid concerns that inflation’s path downward may take longer than initially hoped. Investors continue to analyze economic indicators and anticipate future Fed actions.
