4.09pm: US markets fall ahead of Fed meeting
US markets ended in negative territory, finishing a strong month on a softer footing with investors eyeing the Federal Reserve’s policy meeting which kicks off tomorrow.
At the close the Dow Jones Industrial Average was down 129 points, or 0.39%, at 32,733, the S&P 500 fell 29 points, or 0.75%, to 3,872 and the Nasdaq Composite declined 114 points, or 1.03%, to 10,988.
Despite the falls this was the Dow’s best month since 1976. Monday’s moves in the stock market amounted to a “mild profit-taking pullback and wait-and-see mode” by investors, said Art Hogan, the Boston-based chief market strategist at B. Riley Wealth.
The central bank is widely expected to hike interest rates by 75 basis points on Wednesday at the conclusion of its two-day policy meeting, but investors will keenly looking for any evidence of a softening of the Fed’s stance going forward.
Hopes the Fed may pull back from its aggressive interest rate hike policy have lifted equities in recent weeks, with the S&P 500 notching a gain of nearly 9% over the past two weeks.
12.05pm: US markets ending October on back foot
US indices remained in the red at midday, as the latest Chicago PMI numbers for October pointed to a weaker domestic manufacturing sector, following lower Chinese PMIs released earlier in the session.
At midday, the S&P 500 was down by 0.7% at 3,878, the Nasdaq Composite was down by 1% at 10,996 while the Dow Jones was down by 0.3% to 32,767 points.
Michael Hewson, chief market analyst at CMC Markets, said the latest Chinese manufacturing and non-manufacturing PMIs, which slipped into contraction territory in October, initially caused the main drag on the markets today.
“It’s hard to see these numbers improving in the coming weeks as COVID cases continue to rise, (and) with today’s announcement that Disney’s Shanghai theme park will close indefinitely… it's unlikely to improve sentiment,” Hewson wrote in a market report.
Investors moved on to look at the Chicago PMI numbers for October, he said, nothing that slipped to 45.2 from 45.7 the previous month. The Chicago PMI is the last of the regional manufacturing indices to report before the US national factory data for October is released on Tuesday.
“US markets look to end a strongly positive month on the back foot, as some end of month profit taking kicks in, ahead of this week’s eagerly anticipated Federal Reserve rate meeting,” Hewson wrote.
He noted the biggest drag on the market could be tech stocks, with Meta down sharply, and chipmakers Nvidia and AMD also under pressure. However, he wrote, AMC Entertainment, GameStop and Bed, Bath and Beyond were seeing decent gains.
The major movers at midday include Wynn Resorts (NASDAQ:WYNN), up by over 11% as news broke on billionaire Tilman Fertitta revealed a 6.1% stake. Invisalign maker Align Technologies was up over 6% and energy technology company Nov was up 4.6%.
On the downside, SaaS company Global Payments was down 7%, on 3Q earnings that lagged earnings estimates, while Meta Platforms slid by 4.8% and Newell Brands (NYSE:NWL) fell by 7%, hitting a new 52-week low.
9.40am: Eyes ahead on key reports
US stocks fell on Monday morning following solid gains amid a slew of corporate earnings last week, as investors await the release of key data, including OPEC’s outlook report today, the Fed’s next policy announcement on Wednesday, and October’s monthly employment report due Friday.
Shortly after the market opened, the Dow Jones Industrial Average had fallen 113 points or 0.3% at 32,749 points, the S&P 500 was down 22 points or 0.6% at 3,879 points, and the Nasdaq Composite had shed 77 points or 0.7% at 11,025 points.
Meme stocks GameStop Corp (NYSE:GME) and AMC Entertainment Holdings (NYSE:AMC) Inc surged 16.7% and 10.4% respectively at the open despite a lack of any company announcements.
Forex.com market analyst Fiona Cincotta said oil prices were one to watch after weak Chinese manufacturing activity and ahead of OPEC’s outlook report.
She noted that oil prices were edging lower after solid gains of more than 3% last week, down about 1.8% at the open at US$86.30 per barrel.
“Oil is falling lower after weaker than forecast factory data from China, the world’s largest oil importer,” she said.
“Strict COVID lockdowns are dampening economic growth and business activity, hurting oil demand. China’s crude oil imports fell 4.3% across the first nine months of the year, the first annual drop in 8 years.”
6.30am: Cautious start to big week
US stocks are expected to fall back at the open on Monday, retreating after major indexes ended last week with strong gains, with the focus switching from corporate earnings to Wednesday's Federal Reserve policy decision and then Friday's October non-farm payrolls report.
Futures for the Dow Jones Industrial Average were 0.5% lower in pre-market trading, while those for the S&P 500 were down 0.5%, and contracts for the Nasdaq-100 shed 0.7%.
Despite broadly disappointing Big Tech earnings and a heavy sell-off in their stocks, US equities ended last week on a positive note, thanks to record profits from US Big Oil companies, and a much better-than-expected reaction to Apple results, noted Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Also a positive last Friday, the US PCE index, which is a gauge of inflation closely monitored by the Federal Reserve, remained flat at 6.2% over the year, while the core PCE continued increasing, but happily less than expected.
Ozkardeskaya noted, however: "The US core PCE now stands at 5.1% - that’s more than twice the Fed’s 2% policy target. Therefore, even though the data was less scary than many feared, it will hardly change the Fed’s plan to hike the rates by another 75bp this week, which is given some 80% probability at the start of this week."
She added: "What’s more important than the rate hike itself is what the Fed will be doing next. While some Fed members voiced possibility of slowing the pace of rate increases over the past weeks, there is a good chance that Jerome Powell slashes the dovish hopes this week, as he has done earlier this year. If that’s the case, we could see positive market vibes evaporate."
Adding to caution at the start of the new week, and almost new month, Russia has decided to pull out of a deal to allow Ukrainian crop shipments, blaming strikes on its naval fleet, which it said was due to drone attacks that were launched from Odessa.
"Turkey and the UN will be trying hard to save the pact, but we already see wheat futures jump more than 5% this morning - which is also bad for inflation expectations," Ozkardeskaya noted.
Meanwhile data from China showed both manufacturing and services PMI reports miss expectations, with both PMI indices slipping below 50, to the contraction zone in October due to fresh COVID-19 restrictions in major cities, another concern for investors.