The Dow Jones does not raise its head: pressure on bonds increases after Powell's warnings Wall Street futures point to a downward opening in this Friday's session, to put an end to a week that has once again been very complicated due to the strong pressure to which values are subject due to high bond interest rates. . Updated to:20-10-2023, 14:52:01Luis Suarez . Writing investment strategies
The futures linked to the DOW JONES fell 0.27% to 33,456 points, while those of the S&P 500 lost 0.30%, to 4,290 points. NASDAQ 100 futures fell 0.38% to 14,832 points.
These movements come from a very volatile session on Thursday that ended up dyed red. The Dow Jones lost 250.91 points, or 0.75%, while the S&P 500 fell 0.85%. The Nasdaq fell almost 1%.
Major indices are also on track for losses during the week. The S&P 500 is down 1.2% through Thursday's close, while the Nasdaq is down 1.7%. The Dow Jones is down almost 0.8%.
Investors today continue to digest the conference given by the president of the Federal Reserve, Jerome Powell, yesterday in New York . The top U.S. policymaker said inflation remains too high and slower economic growth will likely be needed to bring it down. Powell also said he doesn't think rates are too high now.
“While the road is likely to be bumpy and take some time, my colleagues and I are united in our commitment to sustainably reduce inflation to 2% ,” he added.
Although Powell did not commit to a path forward for rates during his speech, the market seems to think the central bank will skip a hike in November. Fed funds futures prices reflect a 92% probability that the central bank will keep rates the same at the conclusion of its November meeting, according to the CME FedWatch tool.
“Powell gave some of 'lime' and others of 'sand',” explains Juan J. Fernández Figares, of Link Gestión. “Thus, at the beginning of the meeting, Powell came to rule out the need for the Fed to carry out new increases in official rates by pointing out that financial conditions had become more restrictive due to the rise in bond yield markets. in the long term, as well as the fact that inflation in recent months had behaved satisfactorily. However, he later explicitly re-linked a stronger economy to higher interest rates and for longer.”
“All of this caused the steepening of the yield curve to increase, as short-term bond yields fell and long-term yields rose, which reached new multi-year highs,” explains Fernández-Figares.
The yield on the 10-year US Treasury bond exceeded 5% in the secondary market for the first time in 16 years , reaching an intraday high of 5.001%. It was the first time it traded above that level since July 20, 2007, when it returned as much as 5.029%. Today, at the moment, early in the morning it stands at 4.939%.
On the corporate front, American Express shares react with modest gains after the credit card giant reported above-expected third-quarter profits, helped by resilient spending among its wealthy customers. who ignored concerns about an economic recession.
Profits grew 30% to $2.45 billion, equivalent to $3.30 per share, another record for American Express. Analysts had expected $2.95 per share. Revenue rose 13% from the prior-year quarter to $15.4 billion, in line with estimates.
Comerica shares rose 1.3% in pre-market trading after the lender reported a drop in third-quarter profits from a year ago, but still beating Wall Street estimates. It earned a profit of $1.84 per share, compared to the $1.69 per share expected by the market consensus.
One of the protagonists of the day despite himself is SolarEdge Tech , with drops that exceed 30% before the bell rings. The solar company has lowered its revenue guidance for the third quarter to between $720 million and $730 million, down from previous guidance of between $880 million and $920 million. CEO Zvi Lando explained that the company experienced “substantial and unexpected” cancellations and cancellations of existing pending orders from its European distributors.
Within the same sector, Enphase Energy and First Solar are dragged down by this cut in outlook, and register falls of 15.5% and 5.5%, respectively.
Also bad news for Intuitive Surgical . Its shares fall more than 7% after the company failed to meet third-quarter revenue expectations, posting $1.74 billion. Analysts had forecast $1.77 billion. The company reported adjusted earnings per share of $1.46, beating analyst expectations of $1.41 per share.
Schlumberger reports declines of 2.5% after revenue slightly below analyst expectations in the third quarter. The oilfield services provider posted $8.31 billion in revenue for the quarter, below the $8.33 billion expected by analysts. On the other hand, Schlumberger earned 78 cents per share, beating analysts' forecast by 1 cent.
In raw materials markets, oil prices are expanding their gains and heading for a second consecutive week of increases, amid fears that the conflict between Israel and Gaza will spread throughout the Middle East and disrupt the supply of one of the main producing regions of the world.
US West Texas futures for December delivery , the most active contract, rose 1.24% to $89.47 a barrel. The benchmark Brent crude oil in Europe rises 1.28% to $93.56.
The euro rises 0.05% against the dollar to reach an exchange rate of 1.059 dollars for each community currency.
references: https://www.estrategiasdeinversion.com/actualidad/noticias/bolsa-eeuu/el-dow-jones-no-levanta-cabeza-aumenta-la-presion-n-656631
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