Marketbites: Stocks Rally & Lumber Stops Being The Hottest Investment
Portfolio Manager Commentary:
The indices gained over 2% on Friday to mark a 4% weekly gain as investors are hopeful for the Fed to slow down interest rate hikes. This hopefulness stems from a Wall Street Journal report suggesting that some Fed officials are concerned about over tightening with large rate hikes. Treasury yields fell from their highs seen earlier this week as a result of the report. Still, the yield is trading above 4.2%, a level last seen in 2008.
Although there has been a good bounce in the markets this week, Randy Frederick, an MD at Schwab Center for Financial Research, warns that “like every other bounce we’ve had, it hasn’t been very well sustained... A bounce today doesn’t necessarily mean it’s going to continue into next week. If it does, I suspect it won’t be more than a day or two.”
Verizon released earnings yesterday and announced a 23% decrease in profits after their price increases put a dent into demand. Verizon stock fell 4.5% following the news. Bank stocks were a highlight on Friday with Goldman Sachs rising 4.7% and JPMorgan Chase gaining 5.4%. Meanwhile, Snap stock slid 28% following disappointing 3rd quarter results and weak guidance.
Chart of the Day:
Lumber had been one of the hottest commodities to own during the pandemic reaching never-before-seen prices of $1,600 per 1,000 board feet. Now, weak housing has put a large dent into the demand of lumbar causing prices to tumble and large sawmill companies to cut production. Interfor, one of the largest lumber producers in the world, recently announced a decision to cut lumber output by 17% in the fourth quarter.