U.S. Markets open in 3 hrs 7 mins
  • S&P Futures

    4,540.25
    +31.75 (+0.70%)
     
  • Dow Futures

    34,290.00
    +288.00 (+0.85%)
     
  • Nasdaq Futures

    15,937.50
    +67.75 (+0.43%)
     
  • Russell 2000 Futures

    2,170.00
    +23.70 (+1.10%)
     
  • Crude Oil

    66.94
    +1.37 (+2.09%)
     
  • Gold

    1,777.10
    -7.20 (-0.40%)
     
  • Silver

    22.38
    +0.04 (+0.16%)
     
  • EUR/USD

    1.1340
    +0.0018 (+0.1588%)
     
  • 10-Yr Bond

    1.4340
    0.0000 (0.00%)
     
  • Vix

    28.27
    +1.08 (+3.97%)
     
  • GBP/USD

    1.3326
    +0.0049 (+0.3665%)
     
  • USD/JPY

    112.9530
    +0.1730 (+0.1534%)
     
  • BTC-USD

    56,365.58
    -582.77 (-1.02%)
     
  • CMC Crypto 200

    1,434.65
    -34.43 (-2.34%)
     
  • FTSE 100

    7,127.63
    -41.05 (-0.57%)
     
  • Nikkei 225

    27,753.37
    -182.25 (-0.65%)
     
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Market Recap: Thursday, September 30

In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Stocks turned negative on Thursday in the final session of September and the third quarter. Scott Wren, Wells Fargo Investment Institute Senior Global Equity Strategist and Stephen Dover, Franklin Templeton Chief Market Strategist joined Yahoo Finance Live to discuss.

Video Transcript

- Got just around less than a minute to go until the closing bell. We have Scott Wren, Wells Fargo Investment Institute senior global equity strategist and Steven Dover, Franklin Templeton Chief Market Strategist here to help us break down where things stand as we wrap up the month of September and as we wrap up the third quarter.

Now, we just had the breaking news a few minutes ago that the House did pass a government funding bill sending it to President Biden's desk with the shutdown deadline just hours away. So that should help investor sentiment a bit, but you're seeing some selling action on Wall Street. The DOW, S&P, and NASDAQ all under pressure. The DOW now off just over 500 points, S&P now off just around 1%, and the NASDAQ in negative territory off 56.

- Kaboom, we have a closing bell, and let's see where these markets are going to finally wind up on. Not the strongest of days, the DOW is going to be off about 1.5% down 547 points. S&P 500 off a little bit over 1% down 52 points. NASDAQ down 63 points. And as you heard Seana say, some of the sector action today industrials were down almost 2%. Energy which has been very strong over the last couple of months, energy was down about 1.25%. Let's go back to the panel and bring them in to talk about where we can be headed as we finish out the week.

Scott Rand, let me start with you. All this talk about what's been going on with bond yields and, and you know the spending problems in Washington. We also have third quarter earnings are going to start coming out next month, which starts tomorrow. There's a lot for people to digest, and do you think it's going to be enough to scare investors away and just say, I'm going to wait till November? Scott, I think you might be muted. I do it all the time so you're in good company.

- Let me see if I can fix that.

- You got it.

- Is that good Adam?

- That's good, bring it on.

- All right, great. Got to love at home technology, right? So no I think you know as I look at my what am I going to be afraid of least today? There's a lot of things on that list. And I don't really think earnings is going to be that much of a mystery or concern to the market. I mean, we know we're going to get out of this year with a reasonable amount of earnings growth. I think there is though the overriding theme of, are we going to have embedded inflation? What might the Fed do about it? You know is the Fed going to remain easy?

You know those types of things you know growth, what's global growth going to look like? I think those are the overriding concerns. We've had such a big up in the market that you know to have a 5% pullback or something off the top after the market basically doubled in 15 months. I think you have to put this in the right context. And while there's a lot of things to worry about, many of them have a very low probability of causing a lot of long term problems for the market.

- Stephen, what about you? How are you looking at this just in terms of how investors should be positioned heading into the final quarter of the year?

- Well, today is an interesting day. It marks the 40th anniversary of the bull market in bonds. On 9/30/1981, the 10 year yield was 15.84%. So it's been a long ride for yields to come down, and of course, many people have thought that yields would go up more than they have for a very long period of time. So I think we're, we're in a period of transition where things literally are more complicated. I think we're coming off a fading of the good news and erasing of doubt.

And so we hear that in the last few weeks is there's talk of stagflation, the issues with the energy prices. I think the real positive news is Delta seems to be fading the consumer seems to be strong. We do have these supply chain issues where the view that inflation is transitory. Washington pulled through at the last minute, but it did pull through. So agreeing with Scott, 5% pullback seems very reasonable, even expected, but we're still tend to be positive on opportunities in the equity markets.

- Steven, let me follow up on that because we've had lots of guests tell us look, S&P 500-4800 as the end of the year price target that they see for S&P 500. But I want to get to bonds because a buddy of mine lives in my building alone there's talking about how difficult it is in bonds even if you're looking at high yield. You know high yield used to be at risk, but you got the return. But now high yield it may be 4%, it's not worth the risk. So is that driving people toward equities? I mean, there is no alternative.

- Certainly Dina is probably one of the biggest drivers towards equity. If you have a balance between cash and equity, you have to add some into equity. I think that in terms of corporate bonds and the market in general, if you are looking at the fixed income indexes, there's been an increase in duration over a period of time and an increase in the portion depending on the index that's in high yield bonds, which of course, have a very high correlation to equity. So, so we think and probably a lot of the market thinks that you have better opportunities investing directly in equity than in the corporate bonds and actually getting the better through there.

The quick cautionary point I'd make is when people look at their portfolio, they shouldn't think that fixed income completely, especially high yield fixed income diversifies them versus equity.

- Scott, what do you make of what the bond market is telling us because today it pulled back just a little bit when you take a look at the 10 year, but we did see this run up over the last couple of trading days. Is that all Fed related in your mind?

- Well, Swawn, I think that you know the bond market has the 10 year yield, for instance it's been know low for a long time. It hasn't been reflective of the kind of growth that we're going to see out there or the little bit higher inflation that that we're experiencing at least, at least in the near term over the next maybe 12 months or so. So I think it's natural. We've been looking for rates to drift higher. And really six months ago, you know if you would have asked me probably the last time I was on the show, we thought this year the 10 year yield would finish a little bit North of 2%.

That's unlikely to happen. Our calls now is for about 175, so we're not all that far away from that right now. But you know I think it's natural that rates drift higher. This year and next year we're going to have a good growth environment, even though inflation's likely to decelerate at least based on our work next year relative to this year. So you know rates are, you know they've got a long way to go before they normalize. I'm kind of cautious to even use that word, but you know when, when, when the yield runs up, you know 20 basis points, 30 basis points, something like that, I don't think that's what you want to focus on.

I think that you want, you hopefully have been leaning toward stocks away from bonds. I think that's still the way to go and expecting rates to normalize somewhat at higher levels than they're at right now.

- Scott, if I could just follow up on that because, and it's a rudimentary question but help us understand the people who might be buying bonds or bond funds right now aren't they essentially betting against themselves because new issuance of treasuries in the coming months, we're going to have a better coupon. And how are you going to sell what you're buying today and the future? Who's going to buy it?

- Well, you know Adam that's a-- you know I'm an equity guy and that's a mystery question to me sometimes as well because you know I've asked myself for quite a while. I mean, who, who is buying bonds in here. You've got a negative real yield. Stocks look pretty good to us and have looked pretty good to us. So you know we've been really discouraging our clients to step in here, especially on anything like treasuries. We have some interest in the middle part of the curve. We've liked preferred, we've liked munis, but there's not much in the bond market that we really like that we've been directing clients toward. We've been pushing them towards stocks, we've been looking for yields to go higher. You know there's not a great lot of great buying opportunities here in the bond market.

- Scott Renna, Wells Fargo, and Stephen Dover of Franklin Templeton, thank you to you both.