“At this stage, it’s about not whether we’ll experience a recession but what kind of recession,” stated Sean Sun, portfolio manager at Thornburg Investment Management.
In September, small cap stocks were also in the news. The Russell 2000 index finished September down 9.7%. It fell 0.6% to 1664.72 on Friday, losing 10.21 points.
Higher interest rates have a major impact on stock prices. The slowing economy, rising interest rate and other factors that affect corporate earnings may also put at risk additional leverage.
Carnival, a cruise ship operator, saw its stock drop 23.3 percent after reporting a larger loss than analysts expected for the fourth quarter and lower earnings. Rivals Norwegian Cruise Line, Royal Caribbean Group and Royal Caribbean Group both fell 18.5% and 13.2%, respectively.
Nike fell 12.8 percent after it announced that its profitability had plummeted over the summer because of discounts required to quickly clear out overcrowded warehouses. Nike’s inventory of footwear and other gear has increased 44 percent over the last year.
Nike was also affected by the strong appreciation of US dollars against other currencies this year. Its global revenue rose only 4 percent, instead of the 10 percent that would have been achieved if currency values had stayed the same.
Nike isn’t alone in seeing its stock price rise. You have many big-name retailers. If this leads to more discounts, it could actually be good news. There were some encouraging hints in Friday’s report by the Fed on its preferred measure of inflation. While there was a slight slowdown in goods-related inflation, price gains for service continued to accelerate.
Laden
A Friday report also offered a glimmer for hope. The September gauge of consumer confidence indicated that US expectations for future inflation fell. This is crucial for the Federal Reserve as severely limited expectations of higher inflation could lead to a vicious cycle that can be debilitating and self-reinforcing.
The Treasury yields initially pulled back slightly on Friday to ease some of the pressure on the markets. However, they then rose in the late afternoon.
The 10-year Treasury yield rose to 3.81 percent, from 3.79 percent on Thursday. The 2-year yield closely follows the Fed’s outlook and rose to 4.23 percent.
September was not a good month for all stocks. Biogen rose 35 percent in September, but that was an anomaly. FedEx ended the month with a 29.6 percent drop in market share.
Netflix was up 34.6 percent in the third quarter. This was despite the market rally in July. The year-to-date, it is still at 60.9 per cent.
Global markets remain concerned by a long list of other issues, including increased tensions between Russia and Europe in the aftermath of the invasion. Bond markets have been rattled by a controversial UK tax cut plan. This was due to fears that it might increase inflation. Although bond markets slowed down a little after the Bank of England announced a midweek buying pledge, many UK government bonds are still needed to lower yields.
The risk of something breaking somewhere on the global markets is increased by the rapid and astonishing appreciation of the US Dollar against other currencies.
Stocks fell around the globe after a report revealed that inflation in 19 euro-zone countries rose to an all-time high and that data from China showed weak factory activity.
AP
Market Recap provides a summary of today’s trading. Every Wednesday, you can get it.
Originally published at Brisbane News Station
No comments:
Post a Comment