4.10pm: US markets start Q4 in buoyant fashion
US markets started the quarter in an upbeat mood with all three major indices posting significant gains lifted by advances in oil and commodity prices.
At the close the Dow Jones Industrial Index was up 765 points at 29,490, the S&P 500 soared 93 points to 3,678 while the Nasdaq Composite advanced 240 points to 10,815.
The price of oil rose as the Organization of Petroleum Exporting Countries (OPEC+) considered reducing output by one million barrels a day lifting Exxon Mobil Corp and Chevron Corp. amongst others.
The Institute for Supply Management said its manufacturing PMI dropped to 50.9 this month, missing estimates but still above 50, indicating growth.
"The economic data stream actually came in worse than expected. In a very counterintuitive fashion that likely represents good news for equity markets," said Art Hogan, chief market strategist at B. Riley Wealth in Boston.
"(While) good economic data, strong readings had been a catalyst for selling, this is the first time we've actually seen some negative news be a catalyst."
12.05pm: Dow rose almost 600 points
US indices continued to rally at midday, as investors shook off September’s losses.
At midday, the S&P 500 was up by 1.8% at 3,651, while the Nasdaq Composite was up by 1.3% at 10,711. Earlier this session, the Dow Jones was up by almost 600 points, hitting a day high of 29,428 points, before settling back to 29,311 points at the noon bell.
In September, the Nasdaq Composite shed 10.5%, the S&P 500 fell by 9.3% and the Dow Jones was down by 8.8%.
Fawad Razaqzada, market analyst with StoneX, said gold and silver have rallied sharply today on the back of weakness in US dollar and bond yields, to start the final quarter of the year on a firm footing.
“Out of the two metals, silver was the most impressive as it jumped over 7%, the most since February 2021,” Razaqzada wrote in a note.
“But it is now near key resistance at US$20.45, which had previously acted as support. A clean break above here is still needed to brighten the metal’s outlook, especially with gold also holding at a major resistance area,” Razaqzada wrote.
He also noted that US construction spending fell by a more-than-expected 0.7%.
“The manufacturing PMI for September was nearly two points lower compared to the previous month’s report, at 50.9. But the devil was in the detail. New orders fell by over four points, while employment slipped by 5.5 points, potentially pointing to a weak non-farm payrolls report on Friday,” Razaqzada wrote.
The price of oil rose as the Organization of Petroleum Exporting Countries (OPEC+) considered reducing output by one million barrels a day. At midday, West Texas Intermediate was up by 4%, trading at US$82.59 a barrel.
The major movers included energy stocks Marathon Oil, Devon Energy and Diamondback Energy, all up around 7% on the S&P 500. On the Nasdaq, Regeneron Pharmaceuticals led the way, up 5.6%, while Lam Research was up by 5.4%. The Dow’s major movers were mostly green across the board, with Chevron up by 5%, while Caterpillar was up by 4.4%.
On the downside, Tesla continued in the red, down by 8%, on news of disappointing quarterly deliveries. Illumina was down by 3.9% and DocSign slid by 2.4%.
9.35am: Wall Street starts new quarter on front foot
US stocks opened higher on Monday as investors approached the start of a new quarter with optimism, after consecutive months of steep losses.
Just after the market opened, the Dow Jones Industrial Average had added 285 points or 1% at 29,011 points, the S&P 500 was up 30 points or 0.8% at 3,615 points, and the Nasdaq Composite was up 41 points or 0.4% at 10,623 points.
Tesla Inc shares fell about 6.3% after the electric vehicle maker reported vehicle delivery numbers for 3Q that fell short of expectations despite coming in at 343,830 vehicles, which is 42% higher than the same quarter last year and tops 1Q’s record 310,048 vehicles.
Credit Suisse Group AG was down about 2.8% after a memo from the company’s CEO attempting calm employee and investor nerves about the company backfired, instead building uncertainty around the company.
Embattled meme stock Bed Bath & Beyond had fallen about 2.9% to US$5.90 following the release of a research report by Goldman Sachs analysts which reiterated their ‘Sell’ rating and US$2 price target for the stock.
Forex.com market analyst Fiona Cincotta noted that US stocks were starting their first day of the new quarter on the front foot, with futures on the rise after another steep day of declines on Friday which saw the Dow Jones close below 29,000 points for the first time since November 2020.
“Equities have fallen on stubbornly high inflation, rising interest rates, and recession fears: three themes which are expected to continue into the fourth quarter,” Cincotta said.
6.30am: Caution to reign
US stocks are expected to open mixed on Monday, starting the new quarter on a cautious note after recording sizeable falls in the third quarter.
Fears that the world’s biggest economy will be stuck in a prolonged recession amid rising interest rates and spiraling inflation continue to weigh on investors’ minds and are likely to keep trading volatile.
Futures for the Dow Jones Industrial Average were up 0.3% in pre-market trading, while those for the S&P 500 rose 0.1% but contracts for the Nasdaq-100 were 0.3% lower.
The third quarter ended with losses despite the summer rally, noted Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“The S&P500 finished the third quarter having slipped to the lowest levels this year. The same is true for Nasdaq and the Dow Jones. $24 trillion have been wiped out of the stocks so far this year,” she said.
The US Federal Reserve, meanwhile, is expected to continue hiking interest rates aggressively as it attempts to dampen inflation, which remains around 40-year highs. The rate-setting body lifted interest rates by 75 basis points three times this year in successive meetings and further such increases are predicted.
Released last Friday, the core PCE, the Federal Reserve’s preferred indicator of inflation, advanced to 4.9% from 4.7%, beating expectations and signaling that price pressures are not abating, solidifying rate hike predictions.
Looking ahead, the non-farm payrolls figure for September, due out on Friday, will be key. Continued tightness in the labor market will strengthen the case for more interest rate increases.
“Investors hope that this week’s jobs data doesn’t reveal strong job additions, and solid salary growth in the US,” said Ozkardeskaya.
Such an outcome will likely benefit equity markets. In August, non-farm payrolls rose by 315,000 and consensus estimates point to an increase of around 275,000 in September.
Elsewhere, worrying corporate news has also been adding to the overall gloom.
Nike Inc (NYSE:NKE) was the latest company to warn investors of falling profits due to mountains of stockpiles inherited from the pandemic times, said Ozkardeskaya.
“Not only that Nike sells its huge inventories at discounted prices, but when it brings profits back home, and converts them to the US dollars, the picture is even uglier.”
Nike shares were down 1.1% in pre-market deals.
Speculation over the future of Credit Suisse is also weighing on sentiment even as the bank’s executives spent the weekend trying to reassure markets of its strong capital position and liquidity.
Contact the author at jon.hopkins@proactiveinvestors.com