Wall Street had its worst week in a month as the S&P 500 continued to fall. Dow Jones Industrial Average fell 286 points, Nasdaq composite fell 1.5%…
Wall Street lost more Friday, ending its worst week in a month. S&P 500 lost 1.3% in its fourth straight decline. NASDAQ dropped 1.5% while Dow Jones Industrial Average declined 286 points, or 0.9%.
Tradeweb said that the 10-year Treasury yield briefly reached 5% late Thursday for the first time since 2007, impacting on the stock market. High yields depress stock and investment prices, raise borrowing costs, and hurt the economy.
Early Friday morning, the 10-year Treasury yield touched 5% before settling to 4.91%. It’s catching up to the Federal Reserve’s key interest rate, at 5.25% and at its highest since 2001.
Federal Reserve Chair Jerome Powell’s statement that the central bank won’t raise its main interest rate on Nov. 1 affected yields a day earlier. Financial markets are less confident what the Fed will do after that, and the central bank has said its actions will depend solely on inflation and the labor situation.
The Fed has frantically boosted its overnight interest rate to suffocate excessive inflation, which has dropped since last summer. Oil price increases threaten to add upward pressure. War fears in the Middle East kept crude prices fluctuating.
Benchmark U.S. oil slipped 62 cents to $88.75. It’s fluctuated since the last Hamas-Israel battle began, rising from $70 to over $93 in the summer. International benchmark Brent crude fell 22 cents to $92.16 a barrel.
Before a weekend of war uncertainty, investors flocked to safer investments, raising gold’s price. It increased $13.90 to $1,994.40 an ounce. Last week, it rose almost 3% before the weekend.
According to Bank of America, investors are taking so much money out of junk bonds and global stock funds and keeping so much cash to protect themselves that the market is “extreme bearish.” In a BofA Global Research study, strategist Michael Hartnett said that contrarians should purchase after such a rating since stock prices usually rise in the next three months.
He added that it hasn’t been a dependable warning for major shocks like Lehman Brothers’ 2008 bankruptcy or the Russia-Ukraine war early last year. Perhaps gasoline prices above $100 or the 10-year Treasury rate above 5% would be similar significant surprises this time.
SolarEdge fell 27.3% on Wall Street after lowering its quarterly sales and profit forecast. The company cited slower-than-expected installation rates for European order cancellations.
Enphase Energy plummeted 14.7%, along with other solar equities.
Regions Financial fell 12.4% after reporting a worse quarterly profit. Outside its major titans, banking has been emphasized. It faced criticism earlier this year when high interest rates caused three high-profile U.S. bank failures.
Other regional banks struggled. Comerica slumped 8.5% despite posting greater summer profit than expected. Huntington Bancshares fell 3.9% after beating earnings expectations.
The big oilfield services business SLB slumped 2.9% despite posting better summer profit than predicted. Revenue was somewhat below experts’ projections.
Wall Street favored Knight-Swift Transportation. The transportation company rose 11.7% after reporting better quarterly profit than predicted.
Overall, the S&P 500 lost 53.84 points to 4,224.16. The Dow sank 286.89 to 33,127.28 and the Nasdaq 202.37 to 12,983.81.
European and Asian stock markets fell.
Conclusion
Wall Street had its worst week in a month as the S&P 500 sank 1.3% for a fourth straight drop. NASDAQ plummeted 1.5% while Dow Jones Industrial Average declined 286 points, or 0.9%. With the 10-year Treasury yield briefly topping 5% for the first time since 2007, the bond market has depressed the stock market. High yields raise borrowing costs, hinder the economy, and lower stock and investment prices. The Federal Reserve’s primary interest rate is above 5.25% and at its highest since 2001. The Fed boosted its overnight interest rate to strangle excessive inflation, but rising oil costs could add more pressure. Investors are pulling money out of riskier investments and holding too much cash to protect themselves, signaling “extreme bearish.” SolarEdge tumbled 27.3% after slashing its sales and profit expectations for the current quarter. Regions Financial sank 12.4% after reporting weaker profit than expected for the latest quarter. Knight-Swift Transportation jumped 11.7% after reporting stronger profit for the latest quarter than expected.
