In Thursday’s trading sessions, the US stock markets showed mixed performance. The Nasdaq Composite, dominated by the technology sector, experienced its fourth consecutive day of declines, with a loss of nearly 0.9%. Meanwhile, the S&P 500 index declined by 0.3%, marking its third straight day of losses. Amid these adverse movements, the 30-stock Dow was the exception, with an increase of approximately 0.2%, equivalent to 57.54 points.
The three major indices are on track for weekly losses, with the S&P 500 down 1.4% and the Nasdaq Composite down 2%. This will be the third consecutive negative week for both indices. The Dow records a loss of nearly 1% for the week.
These trends reflect growing concerns about future interest rate hikes by the Federal Reserve. Initial unemployment claims, at 216,000, came in lower than economists’ expectations of 230,000, further fueling market fears.
The ISM Services PMI in August 2023 was pleasantly surprised, recording a more robust growth in the services sector with a value of 54.5, compared to July’s 52.7 and expectations of 52.5. Highlights include increased business activity, new orders, employment, inventories, and supplier deliveries. Wednesday’s rise in Treasury yields coincided with stronger-than-expected economic data, raising concerns about further increases.
Recent data from the US services and manufacturing sectors indicate an acceleration in prices, leading to speculation about the Federal Reserve raising interest rates in November. According to the CME Group, as of Wednesday afternoon, traders are assigning a probability of over 40% to a rate hike in November and a 93% probability that the central bank will keep rates unchanged during the current month’s meeting. The Fed closely monitors inflation and global economic conditions to make informed decisions about interest rate policy.
Over the weekend, Goldman Sachs lowered the recession probability to 15%, anticipating that the Federal Reserve will not raise rates. However, September is typically a weak month for stocks, requiring caution for investors despite the positive news.
The Securities and Exchange Commission (SEC) recently announced a delay in its decisions regarding rule change requests to create bitcoin-based ETFs. This announcement followed the SEC’s court defeat against Grayscale earlier in the week, where judges rejected the SEC’s arguments that denied Grayscale’s request to convert the Grayscale Bitcoin Trust into an ETF.
These delays were widely anticipated, considering the possibility of appeals in the Grayscale case is still open, and the SEC adopted a similar strategy in the case of the Ark21Shares bitcoin ETF application in early August. Even if the SEC ultimately approves a bitcoin-based ETF, many industry experts believe it’s unlikely such a fund will be launched before 2024, representing a potential future target for such financial products.
Meanwhile, the latest macroeconomic data in China indicate a growing services PMI index at its lowest level since January, while Beijing has just established a new agency to promote private sector growth. At the same time, Premier Li Qiang is preparing to address the global stage at the G-20 (India, September 9-10), which will not include Presidents Xi and Putin.
Chinese exports fell by 8.8% annually in August 2023, marking the fourth consecutive month of decline, while imports decreased by 7.3%, marking the seventh drop of the year. Both reductions were lower than expected but put China at risk of not achieving Beijing’s 5% growth target for 2023. The deteriorating real estate crisis, weak consumption, and ongoing pressure on the manufacturing sector influence this worrying picture. The economic situation requires special attention to ensure a sustainable recovery.
Meanwhile, Apple lost about 3% after various sources reported that Chinese authorities have banned public officials from using iPhones. Greater China, including Hong Kong and Taiwan, represents Apple’s third-largest market, accounting for 18% of total sales of $394 billion.
Thursday, September 7, 2023 Market Indices:
Dow Jones +0.17% at 34,500.73
S&P 500 -0.32% at 4,451.14
NASDAQ Composite -0.89% at 13,748.83
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