Stocks fell on Tuesday as traders weighed better-than-expected economic statistics and braced for another Federal Reserve rate rise. The Dow Jones Industrial Average dropped 79.75 points, or 0.24%, to 32,653.20, while the S/P 500 dropped 0.41% to 3,856.10. The Nasdaq Composite Index dropped 0.89% to 10,890.85.
All of the main averages began higher but quickly fell as September job listings revealed a strong labor market. The announcement raised concerns that the central bank will maintain its strong posture in its attempt to control excessive inflation.
The number of open jobs in the United States grew in September, shocking analysts who had expected the number to shrink as a result of the Federal Reserve’s vigorous cooling measures.
According to Bureau of Labor Statistics data released Tuesday, job opportunities reached 10.7 million, up from a revised 10.3 million in August. According to analyst estimates, economists predicted that job opportunities will fall to 10 million in September.
Significant Fall In Prices
Sluggish ISM & PMI data and a significant price fall within them were quashed by the market, which was centred on a notable news item of JOLTS announcement that surpassed a two-month-old benchmark that’s probably manipulated ahead of the upcoming elections.
This stoked a ‘bitter sweet news’ backlash in markets, pummeling rate-trajectory expectations significantly more hawkish just a day before the FOMC decision. The market is currently pricing in a cycle-high terminal yield of 5.06%.
While today’s 75bps rise is a foregone conclusion, the odds of a 75bps boost in December increased significantly yesterday, as did the odds of a 50bps hike in February.
The US equities market had been grinding upward overnight but puked on the JOLTS data, with the Nasdaq extending losses and Small Caps catching a BTFD buy back into the green.
AMZN had a bad day on Tuesday, dropping as much as it did after results last week and going below $1 trillion in market capitalization for the first time since April 2020.
Treasury yields followed suit, falling overnight before soaring significantly on the JOLTS report. The long bond remains a strong outperformer this week (-2bps), while the short bond is underperforming (+13bps).
10 Year rates fell below 4.00% overnight, but were back to approximately 4.05% by the close.
The yield curve thinned significantly, with the 3m30Y spread flipping for the first time since 2019 and being the most flattened since April 2007.
In addition, this is the 5th consecutive flipped close in 3m10Y.
The dollar followed suit, with overnight losses recovered on the JOLTS report.
Bitcoin completed a roundtrip (up then down) to end nearly $20,517.10
Oil Prices Rising
Oil prices rose Tuesday as a result of the JOLTS data, ahead of tonight’s API release.
After falling on the JOLTS report, gold recovered some of its losses for the day.
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