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Wall Street closed sharply lower on Wednesday following a surge in yields of U.S. government bonds. Investors remained concerned that the Fed will continue to pursue tight monetary control for a long period. Moreover, intensified geopolitical conflict in the Middle East dented market participants’ confidence on risky assets like equities. All three major stock indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 1% or 332.57 points to close at 33,665.08. Notably, 23 components of the 30-stock index ended in negative territory, while 3 ended in positive territory. The tech-heavy Nasdaq Composite finished at 13,314.03, plummeting 1.6% or 219.45 points due to weak performance of large-cap technology stocks.
The S&P 500 slid 1.3% to finish at 4,314.60. Nine out of 11 broad sectors of the benchmark ended in negative territory while two in positive zone. The Consumer Discretionary Select Sector SPDR (XLY), the Industrials Select Sector SPDR (XLI), the Real estate Select Sector SPDR (XLRE) and the Materials Select Sector SPDR (XLB) tumbled 2.4%, 2.4%, 2.25 and 2.6%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 7.5% to 19.22. A total of 10.48 billion shares were traded on Wednesday, higher than the last 20-session average of 10.45 billion. Decliners outnumbered advancers on the NYSE by a 4.67-to-1 ratio. On Nasdaq, a 3.33-to-1 ratio favored declining issues.
Surge in Government Bond Yields
On Oct 18, the yield on the benchmark U.S. 10-Year Treasury Note touched 4.92%. This yield hit above 4.9% for the first time since 2007. As a result, the 30-year fixed mortgage rate hit 8%, for the first time since mid-2000. The 10-Year yield is crucial as it reflects investors sentiment on the economy and financial markets.
The yield on the short-term 2-Year U.S. Treasury Note reached 5.22%, for the first time since 2006. This yield is closely linked to market participants’ expectations of a near-term recession. The yield on the long-term 30-Year U.S. Treasury Note hit 5.019%, for the first time since 2007.
Hike in Crude Oil Prices
The ongoing geopolitical conflicts in Middle East also complicated the situation as war between Israel a Palestine terrorist group Hamas has intensified. President Joe Biden has reached Israel on Wednesday. However, his planned meeting with Arab leaders has been canceled by Jordan following the allegation that Israel bombed a hospital in Gaza Strip.
Following the news, Brent futures rose $1.60 or 1.8%, to settle at $91.50 a barrel, while U.S. West Texas Intermediate (WTI) crude rose $1.66 or 1.9%, to settle at $88.32. At their session highs, both benchmarks were up more than $3 a barrel. Higher crude oil prices will make the task harder for the Fed to combat elevated inflation. Rising crude oil prices will likely to result in higher transportation costs, raising the general price level.
Economic Data
The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly Announced that housing starts in September came in at 1.358 million units, missing the consensus estimate of 1.405 million units. The metric for August was revised downward to 1.269 million units from 1.283 million units reported earlier.
Building permits in September came in at 1.473 million units, beating the consensus estimate of 1.45 million units. The metric for August was revised downward to 1.541 million units from 1.543 million units reported earlier.
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Stock Market News for Oct 19, 2023
Wall Street closed sharply lower on Wednesday following a surge in yields of U.S. government bonds. Investors remained concerned that the Fed will continue to pursue tight monetary control for a long period. Moreover, intensified geopolitical conflict in the Middle East dented market participants’ confidence on risky assets like equities. All three major stock indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 1% or 332.57 points to close at 33,665.08. Notably, 23 components of the 30-stock index ended in negative territory, while 3 ended in positive territory. The tech-heavy Nasdaq Composite finished at 13,314.03, plummeting 1.6% or 219.45 points due to weak performance of large-cap technology stocks.
The major loser of the tech-laden index was Lucid Group Inc. (LCID - Free Report) , shares of which plunged 9.4%. Lucid currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 slid 1.3% to finish at 4,314.60. Nine out of 11 broad sectors of the benchmark ended in negative territory while two in positive zone. The Consumer Discretionary Select Sector SPDR (XLY), the Industrials Select Sector SPDR (XLI), the Real estate Select Sector SPDR (XLRE) and the Materials Select Sector SPDR (XLB) tumbled 2.4%, 2.4%, 2.25 and 2.6%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 7.5% to 19.22. A total of 10.48 billion shares were traded on Wednesday, higher than the last 20-session average of 10.45 billion. Decliners outnumbered advancers on the NYSE by a 4.67-to-1 ratio. On Nasdaq, a 3.33-to-1 ratio favored declining issues.
Surge in Government Bond Yields
On Oct 18, the yield on the benchmark U.S. 10-Year Treasury Note touched 4.92%. This yield hit above 4.9% for the first time since 2007. As a result, the 30-year fixed mortgage rate hit 8%, for the first time since mid-2000. The 10-Year yield is crucial as it reflects investors sentiment on the economy and financial markets.
The yield on the short-term 2-Year U.S. Treasury Note reached 5.22%, for the first time since 2006. This yield is closely linked to market participants’ expectations of a near-term recession. The yield on the long-term 30-Year U.S. Treasury Note hit 5.019%, for the first time since 2007.
Hike in Crude Oil Prices
The ongoing geopolitical conflicts in Middle East also complicated the situation as war between Israel a Palestine terrorist group Hamas has intensified. President Joe Biden has reached Israel on Wednesday. However, his planned meeting with Arab leaders has been canceled by Jordan following the allegation that Israel bombed a hospital in Gaza Strip.
Following the news, Brent futures rose $1.60 or 1.8%, to settle at $91.50 a barrel, while U.S. West Texas Intermediate (WTI) crude rose $1.66 or 1.9%, to settle at $88.32. At their session highs, both benchmarks were up more than $3 a barrel. Higher crude oil prices will make the task harder for the Fed to combat elevated inflation. Rising crude oil prices will likely to result in higher transportation costs, raising the general price level.
Economic Data
The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly
Announced that housing starts in September came in at 1.358 million units, missing the consensus estimate of 1.405 million units. The metric for August was revised downward to 1.269 million units from 1.283 million units reported earlier.
Building permits in September came in at 1.473 million units, beating the consensus estimate of 1.45 million units. The metric for August was revised downward to 1.541 million units from 1.543 million units reported earlier.