After a negative August, September confirms the bearish trend of Wall Street. The US stock market continues to discount the obsession of inflation and the consequent risk of a more hawkish Fed. At about 4 pm Italian time, the Dow Jones loses about 130 points (-0.40%), to 31,383 points; the S&P 500 fell by 0.62% to 3,930, while the Nasdaq Composite was down by about 1%, to 11,702 points.
The sells hit US stocks and US Treasuries, and bets on the markets of an even more aggressive Fed on rates trigger another two-year US Treasury spike.
Today, two-year US government bond yields have tested the new record since November 2007, in 15 years, spiking up to 3.516%, then reducing the blaze and traveling around 3.5%.
The inversion of the US yield curve is now more than evidently confirmed: 10-year Treasury rates also jumped, collecting an increase of 11 basis points, but at a lower level than that of two-year rates , around 3.248%. The 30-year rates are also below the two-year rates, and are now 3.365%.
The flare-up in Treasury yields is explained by the Fed’s increasingly hawkish attitude, confirmed by the statements of President Jerome Powell who, last Friday, in his speech at the Jackson Hole symposium, reiterated his determination to defuse inflation with new rate hikes, at the cost of causing “some suffering” to the US economy and labor market.
Yesterday, Loretta Mester, chairman of the Cleveland Federal Reserve and a voting member of the FOMC, the Fed’s monetary policy arm responsible for determining rates, added to the dose.
Mester quashed hopes that the US central bank could return to cut rates next year, after the aggressive hikes planned for this year, which have already begun to halt the surge in inflation.
“My view at the moment is that it will be necessary to bring fed funds rates above 4% by the end of next year to stay at that level,” Mester said, according to excerpts from a speech. reported by the CNBC.
Wall Street is back from the fourth consecutive session of disposals: yesterday the US stock indices failed again the recovery attempt mentioned in the early hours of the trading day.
As a result, the Dow Jones Industrial Average lost 280.44 points, or nearly 0.9%, to 31,510.43 points. The S&P 500 fell 0.8% to 3,955, while the Nasdaq Composite left 0.6% on the ground at 11,816.20.
The negative start of Wall Street – in addition to being the first session in September, today also begins the last quarter of 2022 – does not bode well.
September is known to be the worst month of the year for the US stock market. The CFRA data shows that, since the Second World War, the S&P 500 has lost an average of 0.56% in September; the index ended the month in the red 56% of the time since then, then climbing an average of 0.9% in October.
Also according to the numbers of the CFRA (among the largest independent investment research companies in the world), the S&P 500 also gained 1.4% and 1.6% respectively in November and December.
In all months, the price list has gained an average of 0.7% since 1944; the only negative month other than September was February, with an average decline of -0.2%.
Going back to 2022, the Dow Jones lost 4.1% in August, the S&P 500 and Nasdaq reported losses of -4.2% and -4.6% respectively.
Among the titles in the spotlight in today’s session, we highlight the decline of Nvidia, after the news related to the chip maker giant. In a documentation filed with the SEC, Nvidia announced that it had received an order from the US government, on August 26, to apply for a new license to be able to export new products to China, including Hong Kong. The stock sells more than 8% to Wall Street.
Washington wants to prevent the semiconductors produced by the American giant from being used by the Chinese army. Nvidia said restrictions on its exports to China will affect the A100 and H100 CPUs, which are being sold to companies.
The company added that it expects a loss of $ 400 million this quarter due to potential missed sales to China.