Major US stock indexes rose as 10-year Treasury yields rose to their highest levels since the 2008 financial crisis, as markets believed the Federal Reserve would raise interest rates sharply this week to curb decades of scorching inflation, while meeting the latest economic forecasts. (20th) opened lower, where the Dow Jones Industrial Average fell more than 350 points.
Before the deadline, the Dow Jones Industrial Average fell more than 350 points or 1.22%, the Nasdaq Composite fell more than 100 points or 0.92%, the S&P 500 fell more than 1%, and the Philadelphia Semiconductor Index fell almost 1% .
US stock index futures pared earlier gains before the US market opened and fell as traders braced for another big US interest rate hike. Markets are increasingly worried that the Federal Reserve (Fed) could over-tighten monetary policy, raising the possibility of a hard landing for the economy. Meanwhile, the dollar fueled safe-haven demand, trading at 109.865 by press time.
Futures on the technology-heavy Nasdaq 100 index fell 0.5%, underperforming S&P 500 futures. Elsewhere, in premarket trading, Ford Motor shares fell after it issued its third-quarter profit forecast, with market analysts worried about impact of rising costs.
The US central bank begins its monetary policy meeting today and will announce its interest rate decision and summary of economic outlook at 2:00 at Taiwan time on Thursday (22nd) 4% followed by pause rate hikes.
The Fed’s long-term strategy is seen as avoiding the disastrous “stop-and-go” policy of the 1970s that sent inflation out of control. Investors lowered expectations for a bigger rate hike from the Fed, with only two of 96 economists polled by Bloomberg now predicting a 4-yard rate hike (100 basis points).
In bonds, the 10-year US Treasury yield rose above 3.5 per cent, while the more sensitive two-year yield hit its highest level since 2007 and is on track to top 4 per cent, reflecting investor fears of a hard landing .
Meanwhile, in another worrying trend for US stocks, real interest rates (inflation-adjusted Treasury yields) rose to their highest levels since 2007. It was a key factor driving risk assets were higher when real interest rates were set in negative territory during a decade of easy monetary policy.
US profits have been cut more than they have been raised in the past 15 weeks, according to a Citigroup indicator, and strategists at Morgan Stanley and Goldman Sachs have warned of risks to earnings and stock valuations is growing
From 21:00 on Tuesday (20th) Taipei time:
Today’s key economic data:
- The US August operating license monthly rate was reported at – 10%, expected – 4.5%, the previous value – 0.6%
- The initial value of the annual total of building permits in the United States in August reported 1.517 million units, the expected 1.61 million units, and a previous value of 1.685 million units
- The annual monthly rate of new housing starts in the US in August was 12.2%, expected 0.3%, the previous value – 10.9%
- The annual total of new housing starts in the United States in August reported 1.575 million units, expected 1.445 million units, and a previous value of 1.404 million units.
Ford Motor (F-US) fell 9.11% to $13.57 a share in early trade
Ford Motor warned investors that costs could increase by an additional $1 billion in the third quarter due to inflation and supply chain issues. The company said the supply issue has led to a component shortage affecting about 40,000 to 45,000 vehicles, mostly higher-end trucks and SUVs, that could not be delivered to dealers due to the shortage. In addition, Ford cited inflation as one of the reasons for the $1 billion higher cost than originally estimated.
Nike (NKE-US) fell 4.19% in early trade to $102.72 a share
US Nike stocks fell 2.2% in premarket trading after Barclays downgraded Nike stock from “overweight” to “equal weight”, indicating that Nike’s market in China will continue to fluctuate, while North American and other Regional demand has weakened .
Witton Electronics (WDC-US) fell 3.71% to $35.26 a share in early trade
Witton Electronics fell 1.7 percent in premarket trading after Deutsche Bank downgraded its stock to “Hold” from “Buy”, saying its profit and revenue were hurt by declining demand. Possibly on the lower end of the financial forecast.
Wall Street Analysis:
Danielle DiMartino Booth, chief strategist and chief strategist at Quill Intelligence, said the Fed could tighten policy on the brink of a recession. “The stock market’s reliance on Fed easing during the downturn may be exactly what Chairman Powell wants to eliminate by aggressively raising interest rates, as well as inflation,” he said.
Tightening global monetary policy will increase headwinds for risk assets as central banks deliberately try to slow aggregate demand, ING Group said. In addition, the group’s analysts believe there appears to be no reason for the Fed to ease the hawkish stance it recently displayed at the central bank’s annual meeting in Jackson Hole, predicting that the dollar will remain flat before the Federal Open Market. Committee meeting (FOMC).
Luca Paolini, chief strategist at Pictet Asset Management, said the Fed was likely to slow the pace of rate hikes next year and said rates could peak next year, before the market’s focus turns to how the rate hikes play out. affects the economy and corporate earnings. He believes that he has not yet seen a significant drop in corporate revenue, but it will happen in the near future. He also noted that bonds have limited downside and that an inverted yield curve has historically been a red flag to buy stocks.