First published: 5.58 a.m. EST
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Stock indices saw mixed results on Tuesday after another volatile trading session. The Dow Jones Industrial Average (DJIA) fell by 0.43%, while the S&P 500 (SPX) declined by 0.21%. Meanwhile, the NASDAQ 100 (NDX) saw a surprise gain of 0.16%.
The 10-Year Treasury yield saw another increase today as the rate climbed to 3.97%. Conversely, the Two-Year Treasury yield fell to 4.29%.
In addition, WTI crude oil finished in green territory today after the recent sell-off. The commodity increased by 2.3% to $78.50.
Meanwhile, Starbucks plans to expand rapidly in China. Furthermore, United Natural Foods delivered mixed results in fiscal Q4.
In other news, Uber is going electric in France and has teamed up with Stellantis. Additionally, Harley Davidson’s LiveWire has become the only pureplay EV motorcycle listed company on the NYSE today.
Consumer Confidence Beats Forecast
On Tuesday, the Conference Board released its Consumer Confidence report, which, as the name suggests, measures the consumers’ confidence in the economy. This report is believed to be a leading indicator for spending patterns, as optimistic consumers are more likely to spend as opposed to pessimistic ones.
For September, consumer confidence came in at 108, which was better than expectations of 104.5. This increased for the second straight month. It’ll be interesting to see if this uptrend continues as interest rates continue to rise along with unemployment rates.
New Home Sales Come in Higher than Expected
The Census Bureau released its United States New Home Sales data, which came in at 685,000 for August. For reference, forecasters were expecting a print of 500,000. However, this was lower than last year’s figure of 702,000. The New Home Sales metric measures the number of single-family homes sold in the prior month (on an annualized basis).
This snaps a five-month decline which is likely attributable to the decline in mortgage rates during August. It appears home buyers wanted to lock in the lower rates in anticipation of an increase – a choice that proved to be correct.
However, this boost is likely to be short-lived as interest rates have increased significantly since August.
What Happened on Monday
Monday marked the fifth consecutive day of losses. The market sell-off continued with the S&P 500, the Dow, and the Nasdaq 100 registering losses of 1.03%, 1.11%, and 0.51%. The losses led the Dow, which has so far managed to avoid the bear market territory, to tip into the red zone (20% below its record high). The S&P’s losses were led by declines in the real estate, energy, and utilities sectors.
Another supersized interest rate hike by the Federal Reserve, and the central bank’s commitment to keeping interest rates high till inflation is brought down desirably, is making the market swoon. The highly uncertain and tense environment comes from the belief that the Fed’s hawkishness will continue till the economy breaks under the pressure.
The currency markets also remained volatile on Monday partly fueled by the Federal Reserve’s policy. The British pound also dropped to a record low against the dollar as the new U.K. government expressed its intent to continue with massive tax cuts. Moreover, the Bank of England stated that the depreciation in currency may call for significant interest rate hikes to prevent a textbook currency crisis.
Uncertainty back home along with the U.K.’s concerns are making traders in the U.S. jittery.
On the housing front, rents are finally starting to come back to earth, as the housing bubble threatens to pop. Economists are of the opinion that rents are likely to fall further through winter. Lumber prices also fell to pre-Covid levels, spelling good news for homebuilders.
