US Stock Weekly Update 19 - 23 Sep 2022

U.S. stocks fell across the board last week. The S&P fell 4.6% for the week, the Nasdaq fell 5% and the Dow fell 4%. U.S. 10-year Treasury yields rose 24 basis points for the week, and 2-year Treasury yields rose 35 basis points. Institutional analysis said that on the one hand, it continued to reflect the FOMC meeting, and on the other hand, developed countries continued to sell US bonds to protect their exchange rates. The 10-year and 2-year Treasury yields inverted to -51 basis points, and the market's recession expectations deepened. The VIX, the fear index, surged 13.7% this week. Crude oil prices continued to fall, with Brent crude falling 5.3% to close at 86.75. The U.S. dollar index rose 3%, breaking through 113 and hitting a new 20-year high.

The UK services PMI recorded 49.2 in September, falling below the line of prosperity and decline, the lowest since January 2021. The preliminary reading of the Eurozone Manufacturing PMI in September was 48.5, a 27-month low. Germany's initial manufacturing PMI in September recorded a 27-month low of 48.3. The initial value of the U.S. Markit Services PMI in September was 49.2, 45 was expected, and the previous value was 43.7. Both the services PMI and the initial manufacturing PMI were higher than expected, hitting new highs in three and two months, respectively.

Chris Williamson, chief business economist at S&P Global Market Intelligence, commented on the U.S. PMI data: There is also better news on the inflation front, with supplier shortage pressure easing to the lowest level since October 2020, which has helped alleviate some of the pressure on raw material prices . These supply chain improvements, which have been accompanied by a marked softening in demand since earlier this year, have helped headline inflation in business costs and the average selling price of goods and services to fall to their lowest levels since early 2021. However, inflationary pressures remain high by historical standards, and, with business activity falling, the survey continues to paint an overall picture of the economy struggling in a stagflation environment.

The S&P 500 fell to a June low in intraday trading on Friday. Major firms such as Goldman Sachs are slashing their stock targets, warning that a sharp rise in the outlook for interest rates will weigh on valuations. Commodities tumbled across the board as fears of a hard economic landing intensified. WTI crude fell below $80 a barrel for the first time since January and is expected to fall for four weeks. Continued strength in the U.S. dollar will also be a major drag on corporate earnings, making it a major headwind for equities. Analyst Henry McVey said the U.S. labor shortage is so severe that U.S. tightening may not work, a result that is worse than a drop in corporate profits as it pushes the Federal Reserve to tighten policy further.

Apple fell 1.5 percent as streaming service Apple TV+ has exclusive rights to play the Boston Red Sox against the New York Yankees on Friday.

Tesla fell 4.59% and will recall nearly 1.1 million vehicles in the U.S., largely because the automatic window lift system may not respond correctly after detecting an obstacle, increasing the risk of injury.

Microsoft fell 1.27 percent after Chief Executive Officer (CEO) Satya Nadella said he was "very confident" that the Activision Blizzard deal would be approved by regulators.

Amazon fell 3%, and its AWS Mexico company will build a local operation center in the first quarter of next year to increase bandwidth for customers.

Economic Releases For The Week (26/9/2022-30/9/2022):

27/9/2022

US - United States' New Home Sales, 10.00PM

28/9/2022

US - United States' Pending Home Sales, 10.00PM

29/9/2022

EU - Eurozone's Economic Sentiment, 5.00PM

EU - Eurozone's Industrial Sentiment, 5.00PM

EU - Eurozone's Services Sentiment, 5.00PM

EU - Eurozone's Consumer Confidence, 5.00PM

30/9/2022

JP - Japan's Unemployment Rate, 7.30AM

JP - Japan's Retail Sales, 7.50AM

CN - China's NBS Manufacturing PMI, 9.30AM

CN - China's Non-Manufacturing PMI, 9.30AM

CN - China's Caixin Manufacturing PMI, 9.45AM

EU - Eurozone's Unemployment Rate, 5.00PM

US - United States' Michigan Consumer Sentiment, 10.00PM

Sources from: Investing.com; Reuters.com

Louis Yap

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