Stocks End Lower, Rising Treasury Yields And Geopolitical Concerns Weigh On Markets

Market Moves You Need to See Stocks End Lower, Rising Treasury Yields And Geopolitical Concerns Weigh On Markets [Kevin Matras - EVP - Photo] Profit from the Pros By Kevin Matras Executive Vice President Stocks End Lower, Rising Treasury Yields And Geopolitical Concerns Weigh On Markets [Stocks End Lower, Rising Treasury Yields And Geopolitical Concerns Weigh On Markets] Stocks closed lower again yesterday while Treasury yields rose. After opening modestly higher, stocks proceeded to trade on both sides of unchanged for much of the day. But by mid-afternoon, stocks turned decidedly lower and fell to their worst levels by the close. Fed Chair, Jerome Powell, in a speech to the Economic Club of New York yesterday afternoon, once again noted that inflation was still too high, and left the door open for another rate hike. He said the path to get inflation down to 2% was "likely to be bumpy and take some time," but reiterated the Fed's commitment to that goal. But he also acknowledged that rising yields, especially on the long bond, have tightened financial conditions "significantly in recent months." And he echoed the sentiments of several of his colleagues in saying that rising yields may mean the Fed may not have to tighten any further. Of course, we won't know for certain what the Fed decides until they announce their decision on November 1. But even then, we'll still have the question of what happens in December. In the meantime, we'll get one more inflation report on 10/27 with the Personal Consumption Expenditures (PCE) report, which is the Fed's preferred inflation gauge. Since the Fed has insisted they will remain data dependent, all eyes will be on that next report. The markets also became wobbly after reports that the U.S. Navy shot down 3 missiles and several drones over the Red Sea. And then word that the U.S. State Department issued a worldwide travel advisory to Americans traveling overseas. They did not restrict movement, but did advise to "exercise increased caution" "due to increased tensions in various locations around the world." In other news, Weekly Jobless Claims fell by -13,000 to 198K vs. views for 211K. The Philadelphia Fed Manufacturing Index improved to -9.0 vs. last month's -13.5, but missed the consensus for -7.0. Existing Home Sales came in at 3.96 million units (annualized) vs. last month's 4.04M and views for 3.90M. The y/y change was down -15.4%. And the Leading Indicators report slipped to -0.7% m/m vs. last month's -0.5% and estimates for -0.4%. While earnings season continued it's better than expected performance yesterday with AT&T, American Airlines, and Intuitive Surgical (to name a few), all posting positive EPS surprises, worries over inflation, rising Treasury yields, and war concerns, overshadowed any good news that had come earlier in the day. Earnings season continues today with marquee names like American Express, Schlumberger, and Regions Financial on deck. All in all we'll hear from 41 companies today. That number increase to 958 companies next week. And 1,330 the following week. Earnings season is always an exciting time since stocks typically go up during earnings season. Hopefully, the market can refocus on earnings rather than the aforementioned concerns weighing on stocks lately. If so, we could see a solid finish to the month. Either way, I'm still expecting a Q4 rally. And with the statistical trends supporting that (remember, history shows if the market is up more than 10% thru July (which it was), and August is down (which it was), the remainder of the year is up 100% of the time with an average gain of 9.9% (median of 8.7%), I believe there's a high probability we'll get one. 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