MarketBites: Three Day Losing Streak Drags On
Updated: Sep 27, 2022
Portfolio Manager Commentary:
U.S. markets edged lower yesterday continuing a three-day losing streak amid uncertainty surrounding interest rate increases. The S&P 500 lost 0.2%, the Dow fell 0.5%, and the Nasdaq finished unchanged. The markets have rallied from their June lows, as corporate earnings came in better than expected and signs of easing inflation inspired hopes that the Fed would decelerate rate increases. Recent hawkish comments from the Fed have investors believing that rate hikes will continue to be aggressive, worsening investor sentiment overall.
Real estate, communications services, and healthcare were the worst performers for the S&P on the day. The housing market has been turbulent lately and experts are saying we are in the midst of a housing recession. Sales of existing homes are down 20.2% from the prior year while the median price is up 10.8%. Alternatively, energy was the biggest winner in the broader market index, up 3.6% on the back of rising oil prices.
Crude oil futures rose 4% Tuesday after the Saudi energy minister said there may be production cuts. Prince Abdulaziz bin Salman told Bloomberg that the market for oil futures has become increasingly disconnected from the supply and demand for energy. In response, Saudi Arabia and OPEC+ allies will consider constraining output to balance this out when they meet in September.
Chart of the Day:
The chart below measures activity in both the manufacturing and services sectors, with readings below 50 indicating a contraction. Therefore, the chart depicts that business activity around the world has declined sharply as higher prices and interest rates have slowed consumer demand.