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US stocks closed lower on Thursday, as comments issued by Federal Reserve Chairman Jerome Powell at an event sent the market into turmoil. Traders also looked at earnings results and economic data.
The tech-heavy Nasdaq Composite (COMP.IND) fell 0.96% to 13,186.18 points. A huge surge in Netflix (NFLX) shares was matched by a decline in Tesla (TSLA). The former reported stellar earnings, while the latter missed on both the top and bottom lines and top boss Elon Musk tempered expectations on the Cybertruck.
The benchmark S&P 500 (SP500) retreated 0.85% to 4,277.99 points, while the blue-chip Dow (DJI) slipped 0.75% to 33,414.17 points.
“Having failed to launch a meaningful rally above the 4,500 mark, the market is reeling from a toxic mix of rising rates, economic weakness and a new layer of geopolitical risks,” Leo Nelison, part of investment group iREIT at Alpha, told Seeking. Struggling.” Alpha.
All 11 S&P sectors closed in negative territory, except communications services, which was boosted by a surge in Netflix (NFLX) as well as gains in AT&T (T), after the telecom giant reported increasing its full-year free cash flow. after. Guidance.
In other earnings-related moves, Union Pacific (UNP) was one of the top percentage gainers on the S&P 500 (SP500) after the railroad operator showed improvement in a key metric despite a decline in quarterly revenue. Las Vegas Sands (LVS) also topped the S&P percentage after tourism recovery in Macau and Singapore helped the casino and resort operator top and bottom.
Conversely, Blackstone (BX) finished among the top S&P percentage losers after the world’s largest private equity firm reported quarterly distributable earnings that fell short of consensus.
Fed chief Powell, speaking at the Economic Club of New York, acknowledged in prepared remarks that the low summer inflation reading was a “very favorable development,” while also reiterating that inflation was still very high. Also in the question-and-answer session, Powell said there is evidence that monetary policy is not “tight enough” right now.
Short-end Treasury yields fell following the comments, while long-end maturities rose. The 10-year Treasury yield (US10Y) hit its session high near 5%. It last reached that level on July 20, 2007. The 30-year yield (US30Y) rose 12 basis points to 5.11%. The more rate-sensitive 2-year yield (US2Y) fell 6 basis points to 5.16%.
See how Treasury yields have performed across the curve on the Seeking Alpha Bond page.
“Markets know that even if the Fed refrains from hiking again, it still cannot cut rates, as that could spark a new wave of inflation. Meanwhile, the 10-year (US10Y) is now at 30- With one-year mortgages trading near 5.0%, rates are heading toward 8%,” said iREIT at Alpha’s Nellison.
“Unless the Fed gets favorable inflation numbers soon, it may have to choose between protecting economic growth (and markets) and fighting inflation. This type of uncertainty is toxic for markets, which have been at their lowest for several years.” “Depending on inflation and low rates,” Nellison said.
Heading into Thursday’s economic calendar, the labor market remains resilient as the number of Americans filing for initial jobless claims fell below 200K last week. Additionally, the Philly Fed’s manufacturing activity improved in October, but with a smaller decline than expected. Meanwhile, the US leading indicators index fell more than expected in September. Finally, the decline in existing home sales accelerated in September, a day after the 30-year fixed rate mortgage reached 8%.