Stock Market News for Oct 12, 2022
Wall Street closed mixed on Tuesday after a choppy session. Market participants remained worried that the continuation of the ultra-hawkish monetary policies of the Fed and slower economic growth will result into recession in the near-future. The Dow managed to ended in green while both the S&P 500 and the Nasdaq Composite finished in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) was up 0.1% to close at 29,239.19, terminating a four-day losing streak. Notably, 17 components of the 30-stock index ended in positive territory while 13 in red. At session’s high, the blue-chip index was up more than 400 points.
The major gainer of the Dow was Amgen Inc. AMGN. Shares of the company surged 5.7%. Amgen currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The tech-heavy Nasdaq Composite finished at 10,426.19, sliding 1.1% or 115.91 points due to disappointing performance of large-cap chip-set manufacturers. The tech-laden index has recorded a five-day losing streak.
The S&P 500 dropped 0.7% to end at 3,588.84, posting a five-day losing run. In the intra-day trading, the broad-market index fell to a 2-year low. Eight out of 11 broad sectors of the benchmark index closed in negative territory while three in positive zone. The Communication Services Select Sector SPDR (XLC), the Financials Select Sector SPDR (XLF) and the Technology Select Sector SPDR (XLK) fell 1.9%, 1.3% and 1.5%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 3.6% to 33.63. A total of 11.65 billion shares were traded on Tuesday, lower than the last 20-session average of 11.73 billion. Decliners outnumbered advancers on the NYSE by a 1.50-to-1 ratio. On Nasdaq, a 1.51-to-1 ratio favored declining issues.
IMF Cuts Global Growth Rate
The International Monetary Fund (IMF) has reduced its global economic growth rate for 2023 to 2.7% from 2.9% estimated in July. However, the agency maintained its 2022 global growth forecast at 3.2%. The IMF predicted that a large part of the world will feel like a recession in 2023.
The agency cited three major reasons for this tepid outlook, namely, mounting inflationary pressure across the globe due to the complete devastation of the global supply-chain system, lingering geopolitical conflict between Russia and Ukraine and China’s economic slowdown.
The IMF anticipates that global inflation rate will peak in late 2022 at 8.8% compared with 4.7% in 2021 and will stay elevated for a longer-than-expected period. Global inflation is estimated to come down to 6.5% in 2023 and to 4.1% by 2024.
Investors Remain Skeptical on Recovery
Market participants were worried that the Fed will purse it ultra-hawkish monetary policies buoyed by a robust labor market. In its September FOMC meeting, the Fed has raised the median of the Fed Fund rate for 2022 to 4.4% in September from 3.4% in June.
This means, the range of the benchmark lending rate at the end of 2022 will be 4.25-4.5%, indicating 75 basis-point and 50 basis-point interest rate hike in November and December, respectively. Further, the central bank has projected that the median of the benchmark interest rate will reach 4.6% in 2023. Consequently, yields on U.S. government bonds of different maturity spiked significantly.
The ICE Dollar index is currently hovering around its 20-year high level. Economists and financial researchers are concerned that a rising dollar will hurt the sales of U.S. multinational companies as their products will be more expensive in the international markets. Further, the volume of international trade is likely to be impacted as most of these trades are settled in U.S. dollar terms.
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