Stocks Plunged, Oil And Gold Rallied As Israel-Hamas Conflict Escalates 🫣
67% gain within 15 mins from market open riding on positive bank earnings on Friday. However, stocks fell off their session highs after consumer sentiment data was released at 10am. Preliminary consumer sentiment data slumped in October while inflation expectations spiked.
Hang on bulls, going into year two next week
Market sentiments was bullish at premarket from positive banks earnings but experienced pressure by a spike in oil prices and rising inflation expectations although treasury yields remain unchanged on Friday.
The Federal Reserve may have to cut the Fed funds rate in 2024 or risk a recession, said fund manager Louis Navellier. The FOMC minutes as well as the latest inflation data have served to take a Fed rate cut at its December FOMC meeting off the table for now, he said.
“We have a very uneven economy right now, and we’re going to have some sort of change next year because consumers are really upset about all the food, energy inflation, and of course high housing costs as well,” Navellier said.
The fund manager also sees another compelling factor that could force the Fed to relent. “I think the Fed will be cutting rates next year because they want to stay out of any political debate,” he said, adding, “They’re going to be a big target for politicians to blame for any economy’s problems.”
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Investors also kept an eye on Treasury yields. The yield on the 10-year Treasury was down by roughly 9 basis points at 4.62%. The 2-year Treasury yield was about 1 basis point lower at 5.05%. Yields and prices have an inverted relationship.
“Rates are still in the driver’s seat, and that’s really the rebound that we’re seeing since last Friday,” said Adam Turnquist, chief technical strategist at LPL Financial. “There’s early signs that we’re seeing technically here of a capitulation, but ... we’re still fighting against an uptrend in longer-duration yields.”
Unless the yield on the 10-year Treasury retreats to near 4.35%, Turnquist said he sees a “challenging and maybe choppy market as we look ahead for October.”
Weekly option trades summary
Investors remain slightly cautious about equities, but are optimistic that stocks could rally in the fourth quarter if yields climb back down and rates move lower.
Let's pray for the Middle East conflicts to ease and innocent civilians to remain safe and unharmed 🙏
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Gold, TLT, and oil all up at the same time is middle east tensions...the treasury bond selloff most likely continues without this...we just saw a consumer report that missed to the hot side on inflation expectations.
Just to give some boost to all the bulls, go and take a look at 20th options for UVXY, I promise you will feel better, I think that is a good thing for SPY, sorry if you look at it differently.....
For right now Gold is moving with an inverse correlation to US interest rates. But once something breaks in the markets, that correlation will end.
I am confident that the wealthy and generous Muslim nations will open their arms to the millions of displaced Palestinians. There should be no real need for the US or Europe to take in Palestinian refugees.