What you need to know…
The S&P 500 Index ($SPX) (SPY) this morning is up +2.71%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +2.49%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +3.10%.
Stocks this morning are sharply higher for a second day, with the S&P 500, Dow Jones Industrials, and Nasdaq 100 posting 1-1/2 week highs. Stock index futures are surging this morning as global stock and bond markets rallied after the Reserve Bank of Australia raised interest rates less than expected, which bolstered hopes that aggressive interest rate hikes by the world’s central banks may be nearing the end. The 10-year T-note yield fell to a 1-week low today at 3.558%.
Stock indexes extended their gains after this morning’s economic news showed Aug JOLTS job openings fell more than expected to a 14-month low, which bolstered hopes the Fed may be close to ending aggressive rate hikes.
A rally in mega-cap technology stocks is lifting the overall market. Also, Tesla is up more than +4% after Bloomberg data showed funds backed by Cathie Wood’s Ark Investment Management LLC bought Tesla stock on Monday. In addition, E-commerce stocks are surging today on M&A activity after South Korea’s Naver agreed to Poshmark in a deal worth $1.2 billion.
U.S. Aug JOLTS job openings fell -1,186,000 to a 14-month low of 10.053 million, showing a weaker labor market than expectations of 11.088 million
U.S. Aug factory orders were unchanged m/m and +0.2% m/m ex-transportation, right on expectations.
Comments this morning from San Francisco Fed President Daly were hawkish for Fed policy and bearish for stocks when she said the Fed "must follow through on its commitments to bring inflation down, which does mean further rate hikes and holding those restrictive policies in place until we are truly done with bringing inflation back to target."
Australia’s central bank, the Reserve Bank of Australia (RBA), today raised its cash rate target by +25 bp to 2.60%, less than expectations of a +50 bp rate hike.
Today’s stock movers…
A decline in T-note yields today is lifting technology stocks. Lam Research (LRCX) is up more than +5% to lead gainers in the Nasdaq 100. ASML Holding NV (ASML) and Dexcom (DXCM) are up more than +6%. Also, Marvell Technology (MRVL), Datadog (DDOG), and Crowdstrike Holdings (TEAM) are up more than +5%. In addition, Nvidia (NVDA), Broadcom (AVGO), Micron Technology (MU), Applied Materials (AMAT), Advanced Micro Devices (AMD), and NXP Semiconductors (NXPI) are up more than +4%.
Illumina (ILMN) is up more than +7% today to lead gainers in the S&P 500 and Nasdaq 100 after SVB upgraded the stock to outperform from market perform, with a price target of $270.
Amazon.com (AMZN) is up more than +5% today after JPMorgan Chase said Amazon is the company’s favorite internet stock “by a wide margin,” saying it is positive about Amazon’s prospects over the remainder of the year.
Airline stocks are moving higher today after Raymond James said United Airlines Holdings and Delta Air Lines are in a relatively stronger position in terms of revenue recovery into Q4. United Airlines Holdings (UAL), Delta Air Lines (DAL), and American Airlines Group (AAL) are up more than +6%. Also, Alaska Air Group (ALK) and Southwest Airlines (LUV) are up more than +5%.
Tesla (TSLA) is up more than +4% today after Bloomberg data showed that funds backed by Cathie Wood’s Ark Investment Management LLC bought 132,213 shares of Tesla stock on Monday, its first purchase since mid-June.
E-commerce stocks are rallying today after South Korea’s Naver agreed to Poshmark in a deal worth $1.2 billion. Poshmark (POSH) surged +13%. Also, Stitch Fix (SFIX) and RealReal (REAL) are up more than +12%. In addition, Wayfair (W) is up more than 7%, and Etsy (ETSY) and eBay (EBAY) are up more than +4%.
Across the markets…
Dec 10-year T-notes (ZNZ22) today are up +15 ticks, and the 10-year T-note yield is down -4.9 bp at 3.589%. Dec T-notes rallied to a 1-1/2 week high this morning, and the 10-year T-note yield dropped to a 1-1/2 week low of 3.558%. T-note prices are higher on hopes that the world’s central banks are close to ending their aggressive rate hike campaigns. Global bond yields sank after the Reserve Bank of Australia today raised its cash rate target by +25 bp to 2.60%, below expectations of a +50 bp rate hike. The 10-year German bund yield fell to a 2-week low of 1.770%, and the 10-year UK gilt yield fell to a 1-week low of 3.740%.
The dollar index (DXY00) this morning is down -0.65% and posted a 1-week low. A sharp rally in stocks today has reduced liquidity demand for the dollar. Also, speculation that the Fed may be close to ending its aggressive rate hike campaign has undercut T-note note yields today and weakened the dollar’s interest rate differentials.
EUR/USD (^EURUSD) today is up +0.92% at a 1-1/2 week high. Dollar weakness today has sparked short-covering in EUR/USD. Also, a plunge in European nat-gas prices today to a 2-1/4 month low has eased concerns about an energy crisis in the Eurozone and gave EUR/USD a boost. The euro also found support after today’s news that the Eurozone Aug producer prices rose at a record pace, which is hawkish for ECB policy.
ECB Governing Council member Villeroy de Galhau said the ECB should continue raising interest rates by large increments at its meetings in October and December before reassessing and possibly shifting to a slower pace.
The Eurozone Aug PPI rose a record +43.3% y/y, stronger than expectations of +43.2% y/y.
USD/JPY (^USDJPY) today is up +0.18%. The yen today is moderately lower after a sharp rally in Japan’s Nikkei Stock Index to a 1-1/2 week high curbed the safe-haven demand for the yen. Losses in the yen were limited today after the 10-year T-note yield fell to a 1-1/2 week low.
December gold (GCZ2) is up +16.3 (+0.96%), and December silver (SIZ22) is up +0.371 (+1.80%). Precious metals this morning are moderately higher, with gold posting a 3-week high and silver posting a 3-month high. A slump in the dollar today to a 1-week low is bullish for metals prices. Also, the smaller-than-expected Australian rate hike fueled a rally in global bond markets that is supportive of gold prices. In addition, gold has increased demand as an inflation hedge after today’s economic news showed Eurozone Aug producer prices rose at a record pace. Gold prices continue to be undercut by fund liquidation as long positions in gold ETF’s dropped to a 2-1/4 year low last Friday.
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