Government Shutdown and Moody’s Fallout Loom – Nov 10 Market Recap
Indices
- Dow 34,283, +222 or +0.65%.
- Nasdaq 13,798, +320 or +2.37%.
- MSCI EAFE 2011.90, -19.16 or -0.94%.
- S&P 4,415, +57 or +1.31%.
- USD10Y 4.628%, +7.0bp or +1.54%.
- WTI Crude $76.38/bbl, -$4.51 or -5.58%.
Government Shutdown and Moody’s Fallout Loom
It was a good week, a week of consolidating the gains won after the prior week’s massive rally. However, on Thursday, Fed Chair Powell moved bond yields higher when he was quoted as saying that the FOMC (Federal Reserve Open Market Committee) was not sure that they had achieved sufficient restrictive monetary policy to vanquish inflation. Then, on Friday, Moody’s downgraded the United States credit outlook to negative from stable. While the credit rating agency left unchanged the U.S. credit rating at Aaa, it remains to be seen what type of effect this will have on markets when they open Monday morning. In addition to Powell and Moody’s announcements, the Federal government is scheduled to shut down on Saturday, November 18, at midnight without Congressional agreement. In the long term, the FOMC, their battle against inflation and Moody’s decision are much more impactful but a government shutdown could introduce significant volatility in the short-term depending on the length of the shutdown.
Next Week
Earnings are slowing to a crawl, but this week will feature the retailers with Home Depot (HD), Target (TGT), Gap Stores (GPS), Macy’s (M), TJ Maxx (TJX), and Walmart (WMT) all reporting. Regarding the economic calendar, additional inflation data includes the Consumer Price and Producer Price Indices on Tuesday and Wednesday respectively. In addition, manufacturing data from New York and Philadelphia is expected on Tuesday and Wednesday.
Economic Calendar
- Monday – N/A. Earnings: N/A.
- Tuesday – October Consumer Price Index. Earnings: Home Depot (HD).
- Wednesday – October Producer Price Index. October U.S. Retail Sales. November Empire State Manufacturing Index. Earnings: CSCO Systems (CSCO), Target (TGT), TJ Maxx (TJX).
- Thursday – Initial Jobless Claims. November Philadelphia Fed Manufacturing Survey. Earnings: Walmart (WMT), Applied Materials (AMAT), Gap Stores (GPS), Macy’s (M), Ross Stores (ROST).
- Friday – N/A.
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
Nov 10 Daily Trading Recap…
Monday – Dow +34 to 34,095, Nasdaq +40 to 13,518, S&P +7 to 4,365, USD10Y +10.4bp to 4.662%.
- Six of eleven S&P sectors traded down, led lower by Real Estate, Energy, and Materials.
Tuesday – Dow +56 to 34,152, Nasdaq +121 to 13,639, S&P +12 to 4,378, USD10Y -9.1bp to 4.571%.
- Six of eleven S&P sectors traded down again today, led lower by Energy, Materials, and Real Estate.
- Earnings: Ebay (EBAY) reported revenues in line with expectations and better than expected earnings; EBAY traded down -6.67% post close. Lucid Automotive (LCID) lost less than expected but missed revenues by 25% and cut its production numbers; LCID traded down -4.19%. Rivian (RIVN) lost less than expected on better revenues and boosted its full year production estimate; RIVN traded up +4.48% post close. Toast (TOST) missed earnings on in line revenues and traded down -18% in the extended session. Uber (UBER) missed both their revenue and earnings expectations and traded mostly unchanged.
Wednesday – Dow -40 to 34,112, Nasdaq +10 to 13,650, S&P +4 to 4,382, USD10Y -4.8bp to 4.523%
- Six of eleven S&P sectors traded higher today, led by Technology, Real Estate, and Industrials.
- Earnings: Disney (DIS) beat their earnings, missed on revenues and beat on Disney + subscribers; DIS traded up +3.31% post close.
Thursday – Dow +565 to 33,839, Nasdaq +233 to 13,294, S&P +81 to 4,318, USD10Y +10.7bp to 4.63%.
- All eleven S&P sectors traded down today, led lower by Healthcare, Consumer Discretionary, and Real Estate.
- Jobless claims ticked down slightly to 217,000 vs 215,000 forecast and vs last week’s slightly revised higher print of 220,000 (originally 217,000).
- Markets traded down after Fed Chair Jerome Powell said that the FOMC is not confident that they have achieved a sufficiently restrictive monetary policy to bring inflation down to their 2% target. Bond yields rallied on his comments.
Friday – Dow +391 to 34,283, Nasdaq +276 to 13,798, S&P +67 to 4,415, USD10Y -0.2bp to 4.628%.
- All eleven S&P sectors traded higher, led by Technology, Communication Services, and Consumer Discretionary.
- Moody’s lowered the United States credit outlook from stable to negative citing budget deficits and legislative gridlock. The credit agency left unchanged the nation’s credit rating at Aaa.
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets…Bitcoin, Cardano, Chainlink, Ethereum, ETHE, GBTC, GM, and TSLA.