Market Overview Week of October 10

Market Synopsis: Equites mixed, Treasuries up, Commodities down, dollar up, Crypto down

Past Week Events:

• NFIB Small Business Optimism Index Showed slight increase in small business

• FOMC(Federal Open Market Committee) Minutes showed an aggressive Fed saying the risks of “unacceptably high” inflation than over hiking rates are more concerning(Bad for stocks and good for Bonds)

• PPI(Producer Price Index) showed wholesale prices rise for first time in three months highlighting the fact that inflation is still strong

• CPI(Consumer Price Index) an important factor in understanding inflation came out higher than expected reflecting the fact that inflation is still not under control(Bad for stocks).

Next Week:

• Housing starts for the month of September will be released. This can be a key indicator into how the market is performing; specifically how much demand there is in the market. It measures the amount of construction for residential buildings being built in a month.

• Industrial production index gives information on the production of energy, mining, and manufacturing. This is another indicator on the total market’s well-being.

• Initial and existing unemployment claims measure those who are requesting unemployment benefits and those who are unemployed and continuing to receive benefits.

Market Snapshot:

• This week was filled with much news and volatility in the markets. Events ranging from the FOMC(Federal Open Market Committee) minutes, highlighting an aggressive Fed, and CPI(Consumer Price Index) data a critical indicator for understanding inflation came out “hotter” than expected causing market to sell off significantly on Thursday in the Pre-market and in early trading but later in the day to recover all losses due to a somewhat of a shortsqueeze.

U.S Equities:

• Indexes

SPX 3,583.07 (-1.55%), DJIA 29,634.83(1.15%),

NASDAQ 10,321.39(-3.11%), RUT 1,702.15(-1.16%)

• Sectors

• Consumer Staples(necessities) and Healthcare sectors performed well, closing the week up above 1%, while Consumer Discretionary(unnecessary goods) and Tech underperformed, closing the week down around 3%.

Individual Stocks to Note

• Some individual stocks to note are JP Morgan(JPM) and Wells Fargo(WFC) which reported stellar earnings today and outperformed the market while on the other hand Morgan Stanely missed profit estimates and underperformed the market by 2%.

Fixed Income:

• An inversion of the yield curve is worsening. This can be an indicator of a future recession to some investors. An inverted yield curve may sound difficult to understand, but it is simply when long-term rates(longer dated bonds) are less than that of shorter-term rates. It shows there is much uncertainty in the markets.

• Investors are expecting the Federal Reserve to increase rates by 75 bps(basis point or .75%). An increase by the Federal Reserve of the federal funds rate by 75 basis points reflects there aggressive steps to counter inflation.

• The 10-year United State Treasury security note’s benchmark gained 5 bps on Thursday

Commodities:

• Oil

• Oil is ending the week down around 8 percent after last week's surge of 17 percent in response to OPEC cutting production to two million barrels of oil a day. An increase in drilling or “rig count” raised hopes of an increase in supply thus reducing the price.

• Gold

• Spot Gold price(current value of one ounce of gold) closed around 1650 on Friday after two weeks of solid gains. This was Gold’s worst week since July in response to the dollar’s strength.

Crypto:

• BTC -19197,-1.76%, ETH- 1299.70, -2.45%

• 5 day chart showing the rally on Thursday and the stabilizing reverse on Friday.

• CPI indicates continuing inflation. Stocks dropped sharply in pre-market trading taking BTC with them. However, stocks and BTC along with them rallied later in the day.

• BTC also followed other stocks by reversing all day Friday, but still maintaining the 19000 level.

• Investors are still closely monitoring the 20,000 resistance level, because a break in this level may represent a recovery in BTC.

Europe:

• Stoxx 600 - 391.31, 0.09%

• DAX - 12,437, 1.34%

• FTSE 100- 6,858, -1.89%

• Quantitative tightening

• Conflicts with the Bank of England caused UK Bonds(GILTS) to drop again this past week. The BoE discontinued their quantitative easing (pumping money into the economy) into the bond market, and it is expected that quantitative tightening (Reducing balance sheet or pulling money out of economy) will continue which scares investors in England’s market.

Asia:

• XJO (Australia)- 6758, 0.06%

• Shanghai 180 Index- 8113, 0.10%

• Nikkei 225- 26840, 0.49%

• The Yen experienced a massive sell off this past week, reaching a 32-year low and is approximately trading at 147 times the dollar. The U.S Fed is attempting to mitigate inflation by increasing inflation rates, but the Bank of Japan finds it unnecessary and inappropriate to do the same as the U.S fed and are following their laid back monetary policy. They are showing signs of urgency by trying to support the yen by buying into it for the first time in 24 years.

Work Cited

• “Europe News | Latest Headlines and Stories | Reuters.” Reuters, www.reuters.com/world/europe. Accessed 14 Oct. 2022.

• “Up Next for the Markets: October 17 - October 21.” Up Next for the Markets: October 17 - October 21 | Chase, www.chase.com/personal/investments/learning-and-insights/article/up-next-for-the-markets-october-17-october-21. Accessed 14 Oct. 2022.

• “Home Page - MarketWatch.” MarketWatch, 14 Oct. 2022, www.marketwatch.com.

• “Zerohedge.” Zerohedge, www.zerohedge.com. Accessed 14 Oct. 2022.

• “Yahoo Finance - Stock Market Live, Quotes, Business and Finance News.” Yahoo Finance - Stock Market Live, Quotes, Business & Finance News, finance.yahoo.com. Accessed 14 Oct. 2022.