Thursday September 29, 2022: $142.48 -($7.36) -(4.91%)
Sept 29, 2022 1:24:47 GMT -8
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Post by Dave on Sept 29, 2022 1:24:47 GMT -8
Good morning. We have a red pre-market this morning at -1.34% at this moment.
Stock Market Today: Futures Dip as Investors Move Past BOE-Pivot-Induced Rally
Stock Market Today: Futures Dip as Investors Move Past BOE-Pivot-Induced Rally
U.S. stock market futures dipped early on Thursday morning after the market enjoyed a brief rally on Wednesday on news of the Bank of England’s (BOE) intervention.
Futures on the Dow Jones Industrial Average (DJIA) dipped 1.12%, while those on the S&P 500 (SPX) lost 1.22%, as of 4.39 a.m. EST, Thursday. Meanwhile, the Nasdaq 100 (NDX) futures slid 1.40%.
The BOE Pivot and How it Affected the U.S. Markets
In a surprise intervention, the Bank of England decided to buy large amounts of debt to stabilize the crashing stock market and currency. The move was a sharp contrast to the monetary tightening policies that are being pursued by central banks across the world. The unexpected pivot by the Bank of England gave emotional investors in the U.S. a flicker of hope, and stocks rallied, snapping the Dow and S&P 500 indexes out of a six-day losing streak.
The S&P 500, the Dow, and the Nasdaq 100 shot up 1.97%, 1.88%, and 1.97%, respectively at the end of the regular trading hours of Wednesday.
Alternatively, bond prices rose after the BOE news, pushing down bond yields, and thereby uplifting the stock market further. The benchmark 10-year Treasury yield plunged after briefly crossing 4%.
Rally Likely to be Short-Lived; What Can Investors Do?
However, the S&P 500 and Dow are still on track to mark their worst month since June. Nasdaq may be an exception, which is on track to mark its first quarter in the green after two straight quarters of losses.
Yesterday’s rally is likely to have been a short and unsustainable bear-market rally, which should cool down once investors realize that the Fed is still unflinching on its resolve. The Fed is likely to remain hawkish for the rest of this year and early into the next until interest rates reach 4.4%-4.6%. Currently, they are between 3% and 3.25%.
During times like this, as easy as it is to be driven by emotions, it is prudent to stay away from recency bias and keep a staunch longer-term view of the market. Investors are most likely to benefit over the long run if they have faith in big names in various industries, for instance, Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) and Apple (NASDAQ:AAPL) in the tech sector, McDonald’s (NYSE:MCD) in the restaurants domain, DR Horton (NYSE:DHI) in real estate, etc. Such companies have seen it all and survived, and are likely to survive this downturn as well, should it officially happen.
Futures on the Dow Jones Industrial Average (DJIA) dipped 1.12%, while those on the S&P 500 (SPX) lost 1.22%, as of 4.39 a.m. EST, Thursday. Meanwhile, the Nasdaq 100 (NDX) futures slid 1.40%.
The BOE Pivot and How it Affected the U.S. Markets
In a surprise intervention, the Bank of England decided to buy large amounts of debt to stabilize the crashing stock market and currency. The move was a sharp contrast to the monetary tightening policies that are being pursued by central banks across the world. The unexpected pivot by the Bank of England gave emotional investors in the U.S. a flicker of hope, and stocks rallied, snapping the Dow and S&P 500 indexes out of a six-day losing streak.
The S&P 500, the Dow, and the Nasdaq 100 shot up 1.97%, 1.88%, and 1.97%, respectively at the end of the regular trading hours of Wednesday.
Alternatively, bond prices rose after the BOE news, pushing down bond yields, and thereby uplifting the stock market further. The benchmark 10-year Treasury yield plunged after briefly crossing 4%.
Rally Likely to be Short-Lived; What Can Investors Do?
However, the S&P 500 and Dow are still on track to mark their worst month since June. Nasdaq may be an exception, which is on track to mark its first quarter in the green after two straight quarters of losses.
Yesterday’s rally is likely to have been a short and unsustainable bear-market rally, which should cool down once investors realize that the Fed is still unflinching on its resolve. The Fed is likely to remain hawkish for the rest of this year and early into the next until interest rates reach 4.4%-4.6%. Currently, they are between 3% and 3.25%.
During times like this, as easy as it is to be driven by emotions, it is prudent to stay away from recency bias and keep a staunch longer-term view of the market. Investors are most likely to benefit over the long run if they have faith in big names in various industries, for instance, Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) and Apple (NASDAQ:AAPL) in the tech sector, McDonald’s (NYSE:MCD) in the restaurants domain, DR Horton (NYSE:DHI) in real estate, etc. Such companies have seen it all and survived, and are likely to survive this downturn as well, should it officially happen.