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Interest rates and Middle East focus cause Wall Street index slip

1 month ago
1 month ago


US Stock Indexes Close Lower on Fed Rate Cut Expectations and Middle East Conflict

The US stock indexes closed lower on October 7, with traders pulling back on bets for Federal Reserve interest-rate easing. Meanwhile, concerns over the impact of the Middle East conflict on oil prices added to the negative sentiment in the market.

Factors Affecting the Market

  1. Federal Reserve Expectations:
    • Traders are now pricing in an 86 per cent chance of a 25-basis-point rate cut in November, down from expectations of a 50-basis-point cut.
    • The change in rate-cut expectations caused US Treasury yields to rally, with the yield on benchmark 10-year notes exceeding 4 per cent for the first time in two months.
  2. Hurricane Impact:
    • The market is also bracing for the impact of Hurricane Milton, which is expected to hit the United States this week.
    • Relief efforts are ongoing after Hurricane Helene, a Category-4 storm that caused devastation in six states.
  3. Google’s Mobile-App Business Overhaul:
    • A US judge ordered market heavyweight Alphabet’s Google to revamp its mobile-app business to provide Android phone users with more options, adding to market concerns.

      Other Market Drivers

    • Investors are eagerly anticipating the upcoming quarterly earnings season and fresh economic data.
    • The ongoing Middle East conflict, including missile strikes from Iran and Hezbollah, is adding to investor nervousness.
    • The kickoff of the third-quarter earnings season with reports from banks and the Consumer Price Index inflation reading for September are awaited this week.

      Market Performance

    • The S&P 500 lost 54.90 points, or 0.95 per cent, to end at 5,696.17 points.
    • The Nasdaq Composite lost 213.94 points, or 1.18 per cent, to 17,924.49.
    • The Dow Jones Industrial Average fell 398.71 points, or 0.95 per cent, to 41,951.31.

      Individual Stock Movements

    • Amazon.com saw a decline after a Wells Fargo downgrade, impacting the consumer discretionary sector.
    • Pfizer rose following news of activist investor Starboard Value taking a $1-billion stake in the company.
    • Air Products and Chemicals gained sharply after reports of activist hedge fund Mantle Ridge building a position in the company.

      Goldman Sachs Market Outlook

    • Goldman Sachs raised its 2024 year-end S&P 500 target to 6,000 from 5,600 and lowered the odds of a US recession to 15 per cent from 20 per cent.

      In conclusion, the market is currently reacting to a mix of factors, including Federal Reserve rate cut expectations, the Middle East conflict, and upcoming earnings reports and economic data. Investor sentiment remains cautious as they navigate through these uncertainties.

      This detailed analysis provides insight into the current market conditions and the various factors influencing stock indexes, allowing investors to make informed decisions about their portfolios and financial future.

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