Stocks Volatility After ‘Fast and Furious’ Rally: Markets Wrap

(Bloomberg) — Stocks struggled for direction after their recent rally as traders navigated through a heavy slate of Federal Reserve speakers for clues about the central bank’s next steps.

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The S&P 500 was little changed, following a six-day advance on short covering and speculation the Fed could be done with its tightening cycle. The dollar extended its rebound from its lowest level since September. Bonds rose after Bank of England Chief Economist Huw Bill pointed to a schedule of interest rate cuts by mid-2024. Oil fell below $80 a barrel.

Stocks rallied this month as bond yields retreated on bets that interest rates are peaking. However, top Wall Street strategists including Morgan Stanley and JPMorgan Chase & Co have said they do not expect the rally to last amid higher rates and sluggish growth.

Arthur Hogan, chief market strategist at B. Riley Wealth, says he wouldn’t be surprised to see stocks “chopped” for a few days as markets digest last week’s big moves in bonds and stocks as investors wait for the next round of key bonds. catalysts.

“What about the markets now?” said Jason Traho, head of asset allocation for the Americas at UBS Global Wealth Management.

Two US central bank officials stressed on Tuesday that their main focus is on bringing inflation back fully to the 2% target. Neel Kashkari, president of the Fed Bank of Minneapolis, said policymakers have not yet won the fight against inflation and will consider further tightening if necessary. His Chicago representative, Austin Goolsbee, said officials don’t want to “pre-commit” decisions about tariffs.

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“We will pay particular attention to policymakers’ thoughts on what the recent changes in financial conditions and the nearly 50 basis point drop in 10-year yields and a strong rebound in equity valuations will mean for the path of monetary policy,” he said. Ian Lincoln is head of US rates strategy at BMO Capital Markets.

Meanwhile, November’s bond auctions will provide the first glimpse of the market’s appetite for additional term risk after the Treasury Department ramped up bids again in quarterly returns. This week’s 3-, 10- and 30-year offerings will be $112 billion and $103 billion in August repayment offerings, leading to continued bidding weakness, according to Ira Jersey, rate strategist at Bloomberg Intelligence.

Company Highlights:

  • UBS Group AG reported stronger-than-expected client inflows at its wealth management business, boosted by first signs of consolidation at Credit Suisse from a costly and complex merger with its former rival.

  • DR Horton Inc. It reported a worse-than-expected quarter of orders as rising mortgage rates hurt demand.

  • Uber Technologies Inc. It also gave a forecast for bookings and profits that topped analysts’ estimates, indicating strong demand for the company’s ride-hailing and food delivery businesses during the busy holiday season.

  • KKR & Co. It posted third-quarter results that beat Wall Street estimates as growth in its insurance business offset a decline in private equity asset sales.

  • Carlyle Group Inc. It reported a 43% drop in distributable income in the third quarter as the company took cash from fewer bets amid a slump in deal-making across Wall Street.

  • WeWork Inc. The bankruptcy filing ended a tumultuous period that saw the once-high-flying startup experience a failed initial public offering, Covid-19 lockdowns, a blank-check merger and slow returns to the office.

  • UniCredit SpA is seeking to renegotiate its processing agreement with payments company Nexi SpA, a further sign of how Chief Executive Officer Andrea Orcell is working to reshape Italy’s second-biggest lender.

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Highlights of this week:

  • Euro zone retail sales, Wednesday

  • Germany CBI, Wednesday

  • BOE Governor Andrew Bailey speaks Wednesday

  • US Total Inventories, Wednesday

  • New York Fed President John Williams speaks Wednesday

  • The Bank of Japan publishes a summary of October comments on Thursday

  • BOE Chief Economist Huw Pill talks about the economy on Thursday

  • US Initial Jobless Claims, Thursday

  • Central Bank President Jerome Powell will participate in a panel on monetary policy challenges at the IMF’s annual research conference in Washington on Thursday.

  • Atlanta Fed President Rafael Bostick and his Richmond counterpart Tom Parkin speak Thursday

  • UK industrial production, GDP, Friday

  • ECB President Christine Lagarde will take part in a fireside chat on Friday

  • American University of Michigan Consumer Sentiment, Friday

  • Dallas Fed President Lori Logan and her Atlanta counterpart, Raphael Bostick, speak Friday

Some key movements in the markets:

Shares

  • The S&P 500 was little changed at 9:57 a.m. New York time

  • The Nasdaq 100 rose 0.5%

  • The Dow Jones Industrial Average was little changed

  • The Stoxx Europe 600 was little changed

  • The MSCI world index fell 0.4%

Coins

  • The Bloomberg Dollar Spot Index rose 0.4%

  • The euro fell 0.4% to $1.0675

  • The British pound fell 0.4% to $1.2297

  • The Japanese yen fell 0.4% to 150.63 per dollar

Cryptocurrencies

  • Bitcoin fell 0.5% to $34,855.2

  • Ether fell 0.7% to $1,879.2

Bonds

  • The yield on 10-year Treasuries fell five basis points to 4.60%.

  • Germany’s 10-year yield fell six basis points to 2.67%

  • Britain’s 10-year yield fell nine basis points to 4.29%.

materials

  • West Texas Intermediate crude was down 2.9% at $78.47 a barrel.

  • Spot gold was down 0.9% at $1,961.02 an ounce

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This story was produced with the help of Bloomberg Automation.

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