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  • Weekly tally of COVID cases and deaths continues to fall; Moderna lowers vaccine-sales outlook by as much as $3 billion

    Weekly tally of COVID cases and deaths continues to fall; Moderna lowers vaccine-sales outlook by as much as $3 billion

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    The global tally of COVID-19 cases fell 17% in the week through Oct. 30 from the previous week, while the death toll fell 5%, the World Health Organization said in its weekly update on the virus.

    The omicron variant BA.5 remained dominant globally, accounting for 74.9% of cases sent to a central database. WHO reiterated that newer sublineages of omicron, including BQ.1 and XBB, still appear no more lethal than earlier ones and do not warrant the designation of “variant of concern.”

    But BQ.1 rose in prevalence to 9.0% globally from 5.7% a week ago, while XBB rose to 1.5% from 1.0%.

    “WHO will continue to closely monitor the XBB and BQ.1 lineages as part of omicron and requests countries to continue to be vigilant, to monitor and report sequences, as well as to conduct independent and comparative
    analyses of the different omicron sublineages,” the agency wrote.

    WHO has cautioned that changes in testing and reduced surveillance of the virus are making some of the numbers unreliable and has urged leaders to renew efforts to monitor and track developments.

    In the U.S., known cases of COVID remain at their lowest level since mid-April, although the true tally is likely higher given how many people overall are testing at home, where data are not being collected.

    The daily average for new cases stood at 39,090 on Wednesday, according to a New York Times tracker, up 3% versus two weeks ago. The daily average for hospitalizations was up 2% to 27,161, while the daily average for deaths was down 6% to 345. 

    But cases are climbing in some states, raising concerns among health experts. In Nevada, cases are up 92% from two weeks ago, followed by Missouri, where they are up 75%, Tennessee, where they are up 69%, Louisiana, where they are up 68%, and New Mexico, where they have climbed 54%.

    Physicians are reporting high numbers of respiratory illnesses like RSV and the flu earlier than the typical winter peak. WSJ’s Brianna Abbott explains what the early surge means for the coming winter months. Photo illustration: Kaitlyn Wang

    Coronavirus Update: MarketWatch’s daily roundup has been curating and reporting all the latest developments every weekday since the coronavirus pandemic began

    Other COVID-19 news you should know about:

    • COVID vaccine maker Moderna
    MRNA,
    -2.21%
    posted far weaker-than-expected third-quarter earnings on Thursday and lowered full-year sales guidance by up to $3 billion. The Cambridge, Mass.-based biotech firm said advance purchase agreements, or APAs, for delivery this year are now expected to total $18 billion to $19 billion of product sales, down from guidance of $21 billion that it provided when it reported second-quarter earnings. The FactSet consensus is for full-year sales of $21.3 billion. For fiscal 2023, Moderna has APAs of $4.5 billion to $5.5 billion. The FactSet consensus for 2023 sales is for $9.4 billion.

    • Virax Biolabs Group Ltd.
    VRAX,
    +36.26%
    stock jumped after the biotechnology company said its triple-virus antigen rapid test kit, which tests for RSV, influenza and COVID, has been launched in the European Union, Dow Jones Newswires reported. The test kit, which can be used in both at-home and point-of-care settings, has also been launched in other markets that accept the CE mark, Virax Biolabs said.

    Testing sewage to track viruses has drawn renewed interest after recent outbreaks of diseases like monkeypox and polio. WSJ visited a wastewater facility to find out how the testing works and what it can tell us about public health. Photo illustration: Ryan Trefes

    • Royal Caribbean Group
    RCL,
    +4.11%
    posted its first quarterly profit since the start of the pandemic, but the cruise-line company said it expected a loss for the current quarter, sending its stock lower on Thursday. Load factors were 96% overall and booking volumes were “significantly higher” than in the same period of prepandemic 2019, as the easing of testing and vaccination protocols provided a boost. For the fourth quarter, the company expects adjusted per-share losses of $1.30 to $1.50, compared with the FactSet loss consensus of 71 cents, and projects revenue of “approximately” $2.6 billion, below the FactSet consensus of $2.7 billion. 

    • The death of a 3-year-old boy in northwestern China following a suspected gas leak at a locked-down residential compound has triggered a fresh wave of outrage at the country’s stringent zero-COVID policy, CNN reported. The boy’s father said in a social media post on Wednesday that COVID workers tried to prevent him from leaving their compound in Lanzhou, the capital of Gansu province, to seek treatment for his child, resulting in what he believes was a fatal delay. The post was met with an outpouring of public anger and grief, with several related hashtags racking up hundreds of millions of views over the following day on Weibo, China’s Twitter-like platform.

    Here’s what the numbers say:

    The global tally of confirmed cases of COVID-19 topped 631.4 million on Thursday, while the death toll rose above 6.59 million, according to data aggregated by Johns Hopkins University.

    The U.S. leads the world with 97.6 million cases and 1,071,582 fatalities.

    The Centers for Disease Control and Prevention’s tracker shows that 226.9 million people living in the U.S., equal to 68.4% of the total population, are fully vaccinated, meaning they have had their primary shots.

    So far, just 22.8 million Americans have had the updated COVID booster that targets the original virus and the omicron variants, equal to 7.3% of the overall population.

     

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  • Why the Dow is having a killer month as it heads for best October ever

    Why the Dow is having a killer month as it heads for best October ever

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    The Dow Jones Industrial Average has been criticized by some market watchers for being a poor barometer of equity-market performance given its relatively small sample size of just 30 stocks.

    But this quality, along with the paucity of megacap technology names, has helped shepherd the index toward what’s expected to be its biggest October gain in its 126-year history.

    With a month-to-date gain of 14.40% through Friday, the Dow
    DJIA,
    +2.59%
    is on track for its best monthly performance since January 1976, when it rose 14.41%, according to Dow Jones Market Data. To clinch its best October ever, it only needs to hang on to a month-to-date gain of 10.65% by the time the U.S. market closes on Monday.

    The Dow is still in a bear market, but is now down less than 10% for the year to date. That compares, however, with year-to-date losses of 18.2% for the S&P 500
    SPX,
    +2.46%
    and 29% for the Nasdaq Composite
    COMP,
    -8.39%    .

    Read: What the Dow’s stellar October and Big Tech’s ugly rout say about the stock market right now

    What exactly has made the Dow’s October performance so stellar?

     The blue-chip gauge is packed with energy and industrials stocks, which have been among the best performing sectors for the stock market since the start of the year, noted Art Hogan, chief market strategist at B. Riley Wealth Management. 

    These stocks have performed particularly well since the start of the latest quarterly earnings season, while megacap technology names like Meta Platforms Inc.
    META,
    +1.29%    ,
    Amazon.com Inc.
    AMZN,
    -6.80%
    and Alphabet Inc.
    GOOG,
    +4.30%
    have sputtered after delivering results and guidance that disappointed Wall Street this week.

    “It’s very tech-light, and it’s very heavy in energy and industrials, and those have been the winners,” Hogan said. “The Dow just has more of the winners embedded in it and that has been the secret to its success.”

    See: Live markets coverage

    The Dow is on track to log its highest close in at least two months on Friday as it outperforms both the S&P 500
    SPX,
    +2.46%
    and Nasdaq Composite
    COMP,
    -8.39%    .
    Furthermore, it’s on track to climb for a sixth straight session, what would be its longest winning streak since May 27, according to DJMD. 

    Adding to the list of notable factoids, the average is also on track to log a fourth straight weekly gain, which would cement its longest winning streak since Nov. 5, 2021, when the index rose for five straight weeks. 

    Caterpillar Inc.
    CAT,
    +3.39%    ,
    Chevron Corp.
    CVX,
    +1.17%
    And Amgen Inc.
    AMGN,
    +2.46%
    are the top-performing Dow stocks so far this month, having gained 29.3%, 21.2% and 18.3%, respectively, as of Friday.  

    In recent trade, the blue-chip average was up around 700 points, or 2.2%, on track for its biggest daily point and percentage gain in exactly one week.  

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  • The Dow is soaring as Big Tech tumbles: What that says about the Fed, recession fears, and the path ahead for stocks

    The Dow is soaring as Big Tech tumbles: What that says about the Fed, recession fears, and the path ahead for stocks

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    The past week offered a tale of two markets, with gains for the Dow Jones Industrial Average putting the blue-chip gauge on track for its best October on record while Big Tech heavyweights suffered a shellacking that had market veterans recalling the dot-com bust in the early 2000s.

    “You have a tug of war,” said Dan Suzuki, deputy chief investment officer at Richard Bernstein Advisors LLC (RBA), in a phone interview.

    For the technology sector, particularly the megacap names, earnings were a major drag on performance. For everything else, the market was short-term oversold at the same time optimism was building over expectations the Federal Reserve and other major global central banks will be less aggressive in tightening monetary policy in the future, he said.

    Read: Market expectations start to shift in direction of slower pace of rate hikes by Fed

    What’s telling is that the interest-rate sensitive tech sector would usually be expected to benefit from a moderation of expectations for tighter monetary policy, said Suzuki, who contends that tech stocks are likely in for a long period of underperformance versus their peers after leading the market higher over the last 12 years, a performance capped by soaring gains following the onset of COVID-19 pandemic in 2020.

    RBA has been arguing that there was “a major bubble within major portions of the equity market for over a year now,” Suzuki said. “We think this is the process of the bubble deflating and we think there’s probably further to go.”

    The Dow
    DJIA,
    +2.59%
    surged nearly 830 points, or 2.6%, on Friday to end at a two-month high and log a weekly gain of more than 5%. The blue-chip gauge’s October gain was 14.4% through Friday, which would mark its strongest monthly gain since January 1976 and its biggest October rise on record if it holds through Monday’s close, according to Dow Jones Market Data.

    While it was a tough week for many of Big Tech’s biggest beasts, the tech-heavy Nasdaq Composite
    COMP,
    -8.39%
    and tech-related sectors bounced sharply on Friday. The tech-heavy Nasdaq swung to a weekly gain of more than 2%, while the S&P 500
    SPX,
    +2.46%
    rose nearly 4% for the week.

    Big Tech companies lost more than $255 billion in market capitalization in the past week. Apple Inc.
    AAPL,
    +7.56%
    escaped the carnage, rallying Friday as investors appeared okay with a mixed earnings report. A parade of disappointing earnings sank shares of Facebook parent Meta Platforms Inc.
    META,
    +1.29%    ,
    Google parent Alphabet Inc.
    GOOG,
    +4.30%

    GOOGL,
    +4.41%    ,
    Amazon.com Inc.
    AMZN,
    -6.80%
    and Microsoft
    MSFT,
    +4.02%    .

    Mark Hulbert: Technology stocks tumble — this is how you will know when to buy them again

    Together, the five companies have lost a combined $3 trillion in market capitalization this year, according to Dow Jones Market Data.

    Opinion: A $3 trillion loss: Big Tech’s horrible year is getting worse

    Aggressive interest rate increases by the Fed and other major central banks have punished tech and other growth stocks the most this year, as their value is based on expectations for earnings and cash flow far into the future. The accompanying rise in yields on Treasurys, which are viewed as risk-free, raises the opportunity cost of holding riskier assets like stocks. And the further out those expected earnings stretch, the bigger the hit.

    Excessive liquidity — a key ingredient in any bubble — has also contributed to tech weakness, said RBA’s Suzuki.

    And now investors see an emerging risk to Big Tech earnings from an overall slowdown in economic growth, Suzuki said.

    “A lot of people have the notion that these are secular growth stocks and therefore immune to the ups and downs of the overall economy — that’s not empirically true at all if you look at the history of profits for these stocks,” he said.

    Tech’s outperformance during the COVID-inspired recession may have given investors a false impression, with the sector benefiting from unique circumstances that saw households and businesses become more reliant on technology at a time when incomes were surging due to fiscal stimulus from the government. In a typical slowdown, tech profits tend to be very economically sensitive, he said.

    The Fed’s policy meeting will be the main event in the week ahead. While investors and economists overwhelmingly expect policy makers to deliver another supersize 75 basis point, or 0.75 percentage point, rate increase when the two-day gathering ends on Wednesday, expectations are mounting for Chairman Jerome Powell to indicate a smaller December may be on the table.

    However, all three major indexes remain in bear markets, so the question for investors is whether the bounce this week will survive if Powell fails to signal a downshift in expectations for rate rises next week.

    See: Another Fed jumbo rate hike is expected next week and then life gets difficult for Powell

    Those expectations helped power the Dow’s big gains over the past week, alongside solid earnings from a number of components, including global economic bellwether Caterpillar Inc.
    CAT,
    +3.39%    .

    Overall, the Dow benefited because it’s “very tech-light, and it’s very heavy in energy and industrials, and those have been the winners,” Art Hogan, chief market strategist at B. Riley Wealth Management told MarketWatch’s Joseph Adinolfi on Friday. “The Dow just has more of the winners embedded in it and that has been the secret to its success.”

    Meanwhile, the outperformance of the Invesco S&P 500 Equal Weight ETF
    RSP,
    +2.08%    ,
    up 5.5% over the week, versus the market-cap-weighted SPDR S&P 500 ETF Trust
    SPY,
    +2.38%    ,
    underscored that while tech may be vulnerable to more declines, “traditional parts of the economy, including sectors that trade at a lower valuation, are proving resilient since the broad markets bounced nearly two weeks ago,” said Tom Essaye, founder of Sevens Report Research, in a Friday note.

    “Stepping back, this market and the economy more broadly are starting to remind me of the 2000-2002 setup, where extreme tech weakness weighed on the major indices, but more traditional parts of the market and the economy performed better,” he wrote.

    Suzuki said investors should remember that “bear markets always signal a change of leadership” and that means tech won’t be taking the reins when the next bull market begins.

    “You can’t debate that we’ve already got a signal and the signal is telling up that next cycle not going to look anything like the last 12 years,” he said.

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  • Why the Dow is having a killer month as it heads for best October ever

    Why the Dow is having a killer month as it heads for best October ever

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    The Dow Jones Industrial Average has been criticized by some market watchers for being a poor barometer of equity-market performance given its relatively small sample size of just 30 stocks.

    But this quality, along with the paucity of megacap technology names, has helped shepherd the index toward what’s expected to be its biggest October gain in its 126-year history.

    With a month-to-date gain of 14%, the Dow
    DJIA,
    +2.57%
    is on track for its best monthly performance since January 1976, when it rose 14.4%, according to Dow Jones Market Data. To clinch its best October ever, it only needs to hang on to a month-to-date gain of 10.65% by the time the U.S. market closes on Monday.

    The Dow is still in a bear market and remains down more than 10% for the year to date. That compares, however, with year-to-date losses of 18.6% for the S&P 500
    SPX,
    +2.40%
    and 29.6% for the Nasdaq Composite
    COMP,
    +2.74%    .

    What exactly has made the Dow’s October performance so stellar?

     The blue-chip gauge is packed with energy and industrials stocks, which have been among the best performing sectors for the stock market since the start of the year, noted Art Hogan, chief market strategist at B. Riley Wealth Management. 

    These stocks have performed particularly well since the start of the latest quarterly earnings season, while megacap technology names like Meta Platforms Inc.
    META,
    +1.14%    ,
    Amazon.com Inc.
    AMZN,
    -7.41%
    and Alphabet Inc.
    GOOG,
    +4.28%
    have sputtered after delivering results and guidance that disappointed Wall Street this week.

    “It’s very tech-light, and it’s very heavy in energy and industrials, and those have been the winners,” Hogan said. “The Dow just has more of the winners embedded in it and that has been the secret to its success.”

    See: Live markets coverage

    The Dow is on track to log its highest close in at least two months on Friday as it outperforms both the S&P 500
    SPX,
    +2.40%
    and Nasdaq Composite
    COMP,
    +2.74%    .
    Furthermore, it’s on track to climb for a sixth straight session, what would be its longest winning streak since May 27, according to DJMD. 

    Adding to the list of notable factoids, the average is also on track to log a fourth straight weekly gain, which would cement its longest winning streak since Nov. 5, 2021, when the index rose for five straight weeks. 

    Caterpillar Inc.
    CAT,
    +3.22%    ,
    Chevron Corp.
    CVX,
    +0.75%
    And Amgen Inc.
    AMGN,
    +2.21%
    are the top-performing Dow stocks so far this month, having gained 29.3%, 21.2% and 18.3%, respectively, as of Friday.  

    In recent trade, the blue-chip average was up around 700 points, or 2.2%, on track for its biggest daily point and percentage gain in exactly one week.  

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  • Dow hits 2-month high as blue-chip gauge heads for longest winning streak since May

    Dow hits 2-month high as blue-chip gauge heads for longest winning streak since May

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    The Dow Jones Industrial Average rose nearly 600 points on Friday to its highest level in two months as the blue-chip gauge remained on track for a sixth straight session in the green in what would be its longest winning streak since May 27, according to Dow Jones Market Data.

    All three major indexes were trading higher as expectations that the Federal Reserve will shift toward smaller interest-rate hikes after its November meeting have offset weak earnings this week from some of the market’s biggest megacap technology names.

    How are stocks trading?
    • The S&P 500
      SPX,
      +1.67%
      gained 59 points, or 1.6%, to 3,866.

    • The Dow Jones Industrial Average
      DJIA,
      +1.98%
      rose 589 points, or 1.8%, to 32,623.

    • The Nasdaq Composite
      COMP,
      +1.80%
      advanced 181 points, or 1.7%, to 10,974.

    Both the S&P 500 and Nasdaq were on track to cement their second weekly gain in a row on Friday, although the tech-heavy Nasdaq has substantially lagged after Thursday’s performance, where it was the only one of the major indexes to finish in the red following abysmal earnings from Meta Platforms Inc.

    Barring an intraday turnaround, the Dow is on track to log its fourth straight weekly advance. It remains down just 10.2% so far this year.

    The blue-chip gauge has risen 5% so far this week, while the S&P 500 is up 3.1% and the Nasdaq has risen 1.1%.

    What’s driving markets?

    All eyes were on the Dow Friday as the blue-chip gauge was the only major index to reach new notable highs late this week as its advance during the month of October has somewhat ameliorated its losses for the year so far.

    The Dow has risen 13.5% since the start of the month, leaving it on track for its best October performance since it was created in the late 19th century.

    Perhaps the biggest reason for the Dow’s rise this month is tied to its composition. The average is generally light on technology stocks, while including more of the energy and industrial stocks that have outperformed this year.

    “The Dow just has more of the winners embedded in it and that has been the secret to its success,” said Art Hogan, chief market strategist at B.Reily Wealth.

    Despite some volatility in the premarket session, all three major indexes turned higher after the open as investors remained fixated on expectations for the Fed to down shift to smaller interest rate hikes after next week’s policy meeting — an expectation that endured after the latest reports on inflation and wage growth released Friday.

    See:Market expectations start to shift in direction of slower pace of rate hikes by Fed

    Brad Conger, deputy chief investment officer at Hirtle, Callaghan & Co., said Friday’s data didn’t interfere with mounting expectations that the Fed might soon pause its campaign of aggressive rate hikes.

    “Basically, the market is starting to price in a pause, not a pivot, but maybe a pause. The end is in sight,” Conger said.

    The September core personal consumption expenditures price index — the Fed’s preferred gauge of inflation pressures — came in roughly in line with economists expectations, while a more modest 1.2% gain in private wages and salaries in the third quarter was interpreted as a sign that wage growth may have finally peaked, according to Andrew Hunter, senior U.S. economist at Capital Economics.

    “The Federal Reserve has not yet broken the persistent trend in core inflation and so will likely stay aggressive at next week’s meeting. However, some areas of the economy show significant weakness and could build the case that the Fed downshifts to smaller rate hikes in 2023,” Jeffrey Roach, Chief Economist for LPL Financial in Charlotte, NC, said.

    The final reading of the University of Michigan consumer sentiment index for October added 1.3 index points from 58.6 in September, and was up slightly from an initial reading of 59.8 earlier in the month.

    See: GDP looked great for the U.S. economy, but it really wasn’t

    Since the start of the week, investors have digested a batch of disappointing numbers from some of America’s largest tech companies, which helped to sully the overall quality of S&P 500 earnings this quarter.

    On Thursday night, Amazon.com
    AMZN,
    -9.29%
    joined Microsoft Corp.
    MSFT,
    +2.75%    ,
    Alphabet Inc.
    GOOGL,
    +2.76%
    and Meta
    META,
    +0.34%
    by publishing disappointing earnings for the quarter that ended Sept. 30.

    But despite the disappointing results reported this week, in aggregate, S&P 500 firms are beating earnings expectations by 3.8%, according to Refinitiv data. That’s compared to a long-term average of 4.1% since 1994. However, if energy firms are excluded, the picture darkens substantially.

    Opinion: The cloud boom has hit its stormiest moment yet, and it is costing investors billions

    Shares of Amazon were off 10% after the e-commerce giant, which dominates the consumer-discretionary sector, predicted slower holiday sales and profit while also reporting slower-than-expected growth in its key cloud-computing business.

    Peter Garnry, head of equity strategy at Saxo Bank, said investors were unnerved by Amazon’s guidance cut.

    “The outlook for Q4 was what terrified investors with the retailer guidance operating income in the range $0-4 billion vs est. $4.7 billion and revenue of $140-148 billion vs est. $155.5 billion,” he said in a note.

    One notable exception to the downbeat earnings news this week was Apple Inc.
    AAPL,
    +7.21%    ,
    which proved a bright spot after the iPhone maker’s revenue and earnings topped forecasts, helped by record back-to-school sales of Macs. Shares were up nearly 0.9% in premarket trading.

    Companies in focus
    • Oil giants Chevron Corp. CVX and Exxon Mobil Corp. XOM were climbing on Friday after reporting strong results. Chevron is a Dow component.

    • Pinterest Inc. PINS also saw strong sales and profit in the third quarter, beating Wall Street expectations. Its shares were up more than 14%.

    • Intel Corp. INTC shares advanced more than 8% after reporting an earnings beat. The chip maker said it would cut costs by $3 billion next year, and lay off employees, as it trimmed its outlook again.

    See also: Live Markets coverage:

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  • Stocks are having a stellar October. Why the bear-market rally may have more room to run.

    Stocks are having a stellar October. Why the bear-market rally may have more room to run.

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    An earlier version of this story misstated the date of the U.S. midterm elections. They will be held Nov. 8, not Nov. 9.

    Despite a raft of risky events that investors must face down over the coming weeks, some on Wall Street believe that the latest bear-market rally in stocks has more room to run.

    Although the S&P 500
    SPX,
    +1.50%    ,
    Dow Jones Industrial Average
    DJIA,
    +0.97%
    and Nasdaq Composite
    COMP,
    +16.23%
    remain mired in bear markets, stocks have been bouncing back from the “oversold” levels when the major indexes fell to their lowest levels in two years. Bear markets are known for sharp bounces, such as the rebound that took the S&P 500 up more than 17% from its mid-June low before sliding back down to set a new 2022 low on Oct. 12.

    With that said, here are a few things for investors to keep in mind.

    There’s plenty of event risk facing markets

    On top of a deluge of corporate earnings this week, including some of the biggest megacap tech stocks like Microsoft Corp.
    MSFT,
    +1.07%
    and Amazom.com Inc.
    AMZN,
    +0.64%    ,
    investors will also receive some key economic data reports over the next couple of weeks — including a reading from the Fed’s preferred inflation gauge on Friday, and the October jobs numbers, set to be released on Nov. 4.

    Beyond that, there’s also the Fed’s next policy meeting that concludes on Nov. 2. The Fed is widely expected to hike interest rates by another 75 basis points, the fourth “jumbo” hike this year.

    Midterm U.S. elections, which will determine which party controls the House and Senate in the U.S. are slated to take place Nov. 8.

    Investors are still trying to parse the Fed’s latest messaging shift

    Investors cheered what some market watchers described as a coordinated shift in messaging from the Fed last week, conveyed via an Oct. 21 report from The Wall Street Journal that indicated the size of a December Fed rate increase would be up for debate, along with comments from San Francisco Fed President Mary Daly.

    Still, the Fed isn’t expected to materially pivot any time soon.

    Because the fact remains: there’s plenty of froth that needs to be squeezed out of markets after nearly two years of extraordinary monetary and fiscal stimulus unleashed in the wake of the COVID-19 pandemic, according to Steve Sosnick, chief strategist at Interactive Brokers.

    “It’s easier to inflate a bubble than to pop it, and I’m not using the term ‘bubble’ facetiously,” he said during a phone interview with MarketWatch.

    Richard Farr, chief market strategist at Merion Capital Group, played down the impact of the Fed’s latest “coordinated” shift in guidance during an interview with MarketWatch, saying the impact on the terminal fed-funds rate is relatively immaterial.

    Fed-funds futures traders anticipate the upper end of the central bank’s key target rate will rise to 5% before the end of the first quarter of next year, and remain there potentially into the fourth quarter, although an earlier cut wouldn’t be a complete surprise, according to the CME’s FedWatch tool.

    Market technicians believe stocks might move a little higher

    So far, October isn’t shaping up to be anything like September, when stocks fell 9.3% to polish off the worst first nine months of a calendar year in two decades.

    Instead, the S&P 500 has already risen more than 5.5% since the start of October despite briefly crashing to its lowest intraday level in more than two years following the release of the September consumer-price index report earlier this month.

    Read: ‘Bear killers’ and crashes: What investors need to know about October’s complicated stock-market history

    Technical indicators suggest the S&P 500 can continue to build on last week’s gain, said Katie Stockton, a market strategist at Fairlead Strategies, in a note she shared with clients and MarketWatch.

    According to her, the next key level to watch out for on the S&P 500 is north of 3,900, more than 100 points above where the index closed on Monday.

    “Short-term momentum remains to the upside within the context of the year-to-date downtrend. Support near 3,505 was a natural staging ground for a relief rally, and initial resistance is near 3,914,” she said.

    A key bear sees a tradeable opportunity

    Mike Wilson, Morgan Stanley’s chief U.S. equity strategist and chief investment officer, has been one of Wall Street’s most outspoken bears for more than a year now.

    But in a note to clients early this week, he reiterated that stocks were looking ripe for a bounce.

    “Last week’s tactical bullish call was met with doubt from clients, which means there is still upside as we transition from Fire to Ice — falling inflation expectations can lead to lower rates and higher stock prices in the absence of capitulation from companies on 2023 EPS guidance,” Wilson said.

    This earnings season is off to an good start

    At this point, it’s safe to say that the third-quarter earnings season has vanquished fears that the Fed’s interest-rate hikes and gnawing inflation had already dramatically eroded profit margins, market strategists said.

    The quality of earnings reported already has surpassed some of the early “whisper numbers” bandied about by traders and strategists, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

    In aggregate, companies are reporting earnings 5.4% above expectations, according to data from Refinitiv shared with the media on Monday. This compares to a long-term average — since 1994 — of 4.1%.

    However, when the energy sector is removed from the equation, expectations seem much more grim. The blended year-to-year earnings estimate for the third quarter is -3.6%, according to the Refinitiv data.

    While investors are still waiting on earnings from roughly three-quarters of S&P 500 firms, according to FactSet data, some — like Morgan Stanley’s Wilson — are already looking toward next year as they expect the outlook for profits will darken substantially, possibly leading to an earnings recession — when corporate earnings shrink for two quarters in a row.

    The outlook for the global economy remains dim

    Speaking of energy, crude oil prices are flashing an ominous warning about expectations for the global economy.

    “A lot of the weak oil reflects expectations that the global economy will be in recession and near recession,” said Steve Englander, global head of G-10 currency strategy at Standard Chartered.

    West Texas Intermediate crude-oil futures
    CLZ22,
    +0.48%
     settled lower on Monday, as lackluster import data from China and the end of the Communist Party’s leadership conference hinted at softening demand in the world’s second-largest oil consumer. Prices continued to decline early Tuesday.

    Be wary of ‘fighting the Fed’

    Investors remain worried that “something else might break” in markets, as MarketWatch reported over the weekend.

    It’s possible that such fears inspired the Fed’s apparent guidance shift, Sosnick said. But the fact remains: anybody buying stocks while the Fed is aggressively tightening monetary policy should be prepared to tolerate losses, at least in the near term, he said.

    “Simplest thing of all is: ‘don’t fight the Fed.’ If you’re trying to buy stocks now, what are you doing? It doesn’t mean you can’t buy stocks overall. But it means you’re fighting an uphill battle,” he said.

    The VIX is signaling that investors expect a wild ride

    Even as stocks extended their October rebound for another session on Monday, the Cboe Volatility Index
    VIX,
    -4.49%
    remained conspicuously elevated, reflecting the notion that investors don’t anticipate the market’s wild ride will end any time soon.

    The Wall Street “fear gauge” finished Monday’s session up 0.5% at 29.85 and it was trading just shy of the 30 level early Tuesday.

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  • U.S. stock futures give up early gains after Wall Street’s best week since June

    U.S. stock futures give up early gains after Wall Street’s best week since June

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    U.S. stock futures gave up strong early-session gains overnight after Wall Street notched its best week since June.

    After initially surging about 300 points, or 1% on Sunday evening, Dow Jones Industrial Average futures
    YM00,
    -0.02%
    were last about flat at midnight Eastern, while S&P 500 futures
    ES00,
    +0.05%
    and Nasdaq-100 futures
    NQ00,
    +0.16%
    similarly gave up sharp early gains.

    The U.S. Dollar Index
    DXY,
    +0.19%
    nudged higher, while the British pound
    GBPUSD,
    +0.12%
    surrendered much of an afternoon rally fueled by the possibility that Rishi Sunak will be Britain’s next prime minister, after Boris Johnson bowed out of the running. Crude prices
    CL.1,
    -0.55%
    ticked slightly higher Sunday.

    On Friday, the Dow Jones Industrial Average
    DJIA,
    +2.47%
     gained 748.97 points, or 2.5%, to close at 31,082.56. The S&P 500
    SPX,
    +2.37%
     climbed 86.97 points, or 2.4%, to finish at 3,752.75, and the Nasdaq Composite
    COMP,
    -0.81%
     rose 244.87 points, or 2.3%, to end at 10,859.72.

    The three major indexes scored their biggest weekly percentage gains since June last week. For the week, the Dow rose 4.9%, the S&P 500 gained 4.7% and the Nasdaq advanced 5.2%.  Yields on 10-year Treasury notes
    TMUBMUSD10Y,
    4.156%
    ended Friday at 4.228%.

    Investors were heartened by reports that the Fed may back off slightly from its aggressive rate-hiking policy later this year.

    The upcoming week is the busiest of the third-quarter earnings season, with 165 S&P 500 companies, including 12 Dow components reporting. That includes earnings from Big Tech companies Alphabet
    GOOGL,
    +1.16%    ,
    Amazon
    AMZN,
    +3.53%    ,
    Apple
    AAPL,
    +2.71%    ,
    Meta
    META,
    -1.16%
    and Microsoft
    MSFT,
    +2.53%    .

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  • Why stock-market investors fear ‘something else will break’ as Fed attacks inflation

    Why stock-market investors fear ‘something else will break’ as Fed attacks inflation

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    Some investors are on edge that the Federal Reserve may be overtightening monetary policy in its bid to tame hot inflation, as markets look ahead to a reading this coming week from the Fed’s preferred gauge of the cost of living in the U.S.  

    “Fed officials have been scrambling to scare investors almost every day recently in speeches declaring that they will continue to raise the federal funds rate,” the central bank’s benchmark interest rate, “until inflation breaks,” said Yardeni Research in a note Friday. The note suggests they went “trick-or-treating” before Halloween as they’ve now entered their “blackout period” ending the day after the conclusion of their November 1-2 policy meeting.

    “The mounting fear is that something else will break along the way, like the entire U.S. Treasury bond market,” Yardeni said.

    Treasury yields have recently soared as the Fed lifts its benchmark interest rate, pressuring the stock market. On Friday, their rapid ascent paused, as investors digested reports suggesting the Fed may debate slightly slowing aggressive rate hikes late this year.

    Stocks jumped sharply Friday while the market weighed what was seen as a potential start of a shift in Fed policy, even as the central bank appeared set to continue a path of large rate increases this year to curb soaring inflation. 

    The stock market’s reaction to The Wall Street Journal’s report that the central bank appears set to raise the fed funds rate by three-quarters of a percentage point next month – and that Fed officials may debate whether to hike by a half percentage point  in December — seemed overly enthusiastic to Anthony Saglimbene, chief market strategist at Ameriprise Financial. 

    “It’s wishful thinking” that the Fed is heading toward a pause in rate hikes, as they’ll probably leave future rate hikes “on the table,” he said in a phone interview. 

    “I think they painted themselves into a corner when they left interest rates at zero all last year” while buying bonds under so-called quantitative easing, said Saglimbene. As long as high inflation remains sticky, the Fed will probably keep raising rates while recognizing those hikes operate with a lag — and could do “more damage than they want to” in trying to cool the economy.

    “Something in the economy may break in the process,” he said. “That’s the risk that we find ourselves in.”

    ‘Debacle’

    Higher interest rates mean it costs more for companies and consumers to borrow, slowing economic growth amid heightened fears the U.S. faces a potential recession next year, according to Saglimbene. Unemployment may rise as a result of the Fed’s aggressive rate hikes, he said, while “dislocations in currency and bond markets” could emerge.

    U.S. investors have seen such financial-market cracks abroad.

    The Bank of England recently made a surprise intervention in the U.K. bond market after yields on its government debt spiked and the British pound sank amid concerns over a tax cut plan that surfaced as Britain’s central bank was tightening monetary policy to curb high inflation. Prime minister Liz Truss stepped down in the wake of the chaos, just weeks after taking the top job, saying she would leave as soon as the Conservative party holds a contest to replace her. 

    “The experiment’s over, if you will,” said JJ Kinahan, chief executive officer of IG Group North America, the parent of online brokerage tastyworks, in a phone interview. “So now we’re going to get a different leader,” he said. “Normally, you wouldn’t be happy about that, but since the day she came, her policies have been pretty poorly received.”

    Meanwhile, the U.S. Treasury market is “fragile” and “vulnerable to shock,” strategists at Bank of America warned in a BofA Global Research report dated Oct. 20. They expressed concern that the Treasury market “may be one shock away from market functioning challenges,” pointing to deteriorated liquidity amid weak demand and “elevated investor risk aversion.” 

    Read: ‘Fragile’ Treasury market is at risk of ‘large scale forced selling’ or surprise that leads to breakdown, BofA says

    “The fear is that a debacle like the recent one in the U.K. bond market could happen in the U.S.,” Yardeni said, in its note Friday. 

    “While anything seems possible these days, especially scary scenarios, we would like to point out that even as the Fed is withdrawing liquidity” by raising the fed funds rate and continuing quantitative tightening, the U.S. is a safe haven amid challenging times globally, the firm said.  In other words, the notion that “there is no alternative country” in which to invest other than the U.S., may provide liquidity to the domestic bond market, according to its note.


    YARDENI RESEARCH NOTE DATED OCT. 21, 2022

    “I just don’t think this economy works” if the yield on the 10-year Treasury
    TMUBMUSD10Y,
    4.228%
    note starts to approach anywhere close to 5%, said Rhys Williams, chief strategist at Spouting Rock Asset Management, by phone.

    Ten-year Treasury yields dipped slightly more than one basis point to 4.212% on Friday, after climbing Thursday to their highest rate since June 17, 2008 based on 3 p.m. Eastern time levels, according to Dow Jones Market Data.

    Williams said he worries that rising financing rates in the housing and auto markets will pinch consumers, leading to slower sales in those markets.

    Read: Why the housing market should brace for double-digit mortgage rates in 2023

    “The market has more or less priced in a mild recession,” said Williams. If the Fed were to keep tightening, “without paying any attention to what’s going on in the real world” while being “maniacally focused on unemployment rates,” there’d be “a very big recession,” he said.

    Investors are anticipating that the Fed’s path of unusually large rate hikes this year will eventually lead to a softer labor market, dampening demand in the economy under its effort to curb soaring inflation. But the labor market has so far remained strong, with an historically low unemployment rate of 3.5%.

    George Catrambone, head of Americas trading at DWS Group, said in a phone interview that he’s “fairly worried” about the Fed potentially overtightening monetary policy, or raising rates too much too fast.

    The central bank “has told us that they are data dependent,” he said, but expressed concerns it’s relying on data that’s “backward-looking by at least a month,” he said.

    The unemployment rate, for example, is a lagging economic indicator. The shelter component of the consumer-price index, a measure of U.S. inflation, is “sticky, but also particularly lagging,” said Catrambone.

    At the end of this upcoming week, investors will get a reading from the  personal-consumption-expenditures-price index, the Fed’s preferred inflation gauge, for September. The so-called PCE data will be released before the U.S. stock market opens on Oct. 28.

    Meanwhile, corporate earnings results, which have started being reported for the third quarter, are also “backward-looking,” said Catrambone. And the U.S. dollar, which has soared as the Fed raises rates, is creating “headwinds” for U.S. companies with multinational businesses.

    Read: Stock-market investors brace for busiest week of earnings season. Here’s how it stacks up so far.

    “Because of the lag that the Fed is operating under, you’re not going to know until it’s too late that you’ve gone too far,” said Catrambone. “This is what happens when you’re moving with such speed but also such size,  he said, referencing the central bank’s string of large rate hikes in 2022.

    “It’s a lot easier to tiptoe around when you’re raising rates at 25 basis points at a time,” said Catrambone.

    ‘Tightrope’

    In the U.S., the Fed is on a “tightrope” as it risks over tightening monetary policy, according to IG’s Kinahan. “We haven’t seen the full effect of what the Fed has done,” he said.

    While the labor market appears strong for now, the Fed is tightening into a slowing economy. For example, existing home sales have fallen as mortgage rates climb, while the Institute for Supply Management’s manufacturing survey, a barometer of American factories, fell to a 28-month low of 50.9% in September.

    Also, trouble in financial markets may show up unexpectedly as a ripple effect of the Fed’s monetary tightening, warned Spouting Rock’s Williams. “Anytime the Fed raises rates this quickly, that’s when the water goes out and you find out who’s got the bathing suit” — or not, he said.

    “You just don’t know who is overlevered,” he said, raising concern over the potential for illiquidity blowups. “You only know that when you get that margin call.” 

    U.S. stocks ended sharply higher Friday, with the S&P 500
    SPX,
    +2.37%    ,
    Dow Jones Industrial Average
    DJIA,
    +2.47%
    and Nasdaq Composite each scoring their biggest weekly percentage gains since June, according to Dow Jones Market Data. 

    Still, U.S. equities are in a bear market. 

    “We’ve been advising our advisors and clients to remain cautious through the rest of this year,” leaning on quality assets while staying focused on the U.S. and considering defensive areas such as healthcare that can help mitigate risk, said Ameriprise’s Saglimbene. “I think volatility is going to be high.”

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  • I chemically straightened my hair for 7 years. Now there’s a link between ‘relaxers’ and higher risk of uterine cancer in Black women like me

    I chemically straightened my hair for 7 years. Now there’s a link between ‘relaxers’ and higher risk of uterine cancer in Black women like me

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    I begged my mom for two things one Christmas season when I was nine years old: a Barbie doll house and a “perm” — the colloquial term we used for relaxers. We did not understand then that there was a major difference between the two.

    Though hesitant at first, as a mom with four daughters — I’m the youngest — she knew my pleading wouldn’t stop until my hair looked like one of the girls on the ‘Just For Me’ box.

    I found out only recently that those models didn’t actually have the relaxed hair themselves.

    Before that Christmas break was over, what once was a giant afro was bone-straight and down the length of my back like I’d never seen it before.

    My hair is thick and coarse, so at the time, I assumed the chemical straightening cream had to stay in my hair for a longer length of time to really get the kinks and curls straighter.

    So when my mom asked if my scalp was burning — yes, it was! — I pushed through and held out just a little bit longer to make sure it would really work.

    Even at that young age, I thought beauty was pain and that having straight hair was more socially acceptable — though no one in my family ever told me that.

    That belief was reaffirmed for me that Monday when I walked into school and people responded well to the length and straightness of my hair.

    I got relaxers pretty regularly for the next six or seven years after that.

    My mom, myself, our friends and family had never given any thought to how the application of these chemicals on our hair and scalp might be affecting our physical health.

    And we wouldn’t know until over a decade after my first relaxer and over a century after chemical straightening was introduced to the Black community in the early 1900s.

    A link between chemical hair straighteners and uterine cancer in Black women

    On Oct. 17, the National Institute of Environmental Health Sciences (NIEHS) published findings of the Sister Study, including data from over 33,000 women who were tracked for nearly 11 years.

    The goal was to pinpoint risk factors for breast cancer and other health conditions, and researchers discovered something alarming.

    Within that time frame, 378 women were diagnosed with uterine cancer, and those who used hair straighteners over four times in the previous year “were more than twice as likely to go on to develop uterine cancer compared to those who did not use the products.”

    Around 60% of the women who reported using hair straightening products self-identified as Black, the press release states.

    “Because Black women use hair straightening or relaxer products more frequently and tend to initiate use at earlier ages than other races and ethnicities, these findings may be even more relevant for them,” said Che-Jung Chang, an author on the study and a research fellow in the NIEHS Epidemiology Branch in the press release.

    Though the study didn’t include specific brands, there are certain chemicals that may be contributing to the increased uterine cancer risk including:

    • Parabens
    • Bisphenol A
    • Metals
    • Formaldehyde

    For other chemical-based hair products like highlights, bleach, hair dyes and perms, researchers didn’t find associations with uterine cancer.

    Thankfully, women in my life like my older sister and best friend, who defied the ‘straight hair’ standard, showed me what embracing my natural hair could look like.

    I began my natural hair journey at 16, and I haven’t relaxed my hair since.

    Still, I wonder what these findings will mean for me, my loved ones and other Black women in the future.

    Sign up now: Get smarter about your money and career with our weekly newsletter

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  • ‘Material risk’ looms over stocks as investors face bear market’s ‘second act,’ warns Morgan Stanley

    ‘Material risk’ looms over stocks as investors face bear market’s ‘second act,’ warns Morgan Stanley

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    Stock-market investors have been adjusting to the jump in interest rates amid high inflation, but they have yet to cope with profit headwinds faced by the S&P 500, according to Morgan Stanley Wealth Management.

    “While a rate peak may solidify estimates for the equity risk premium and valuation multiples, equity investors still face the bear market’s second act — the earnings outlook,” said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, in a note Monday. 

    “They have been slow to recognize that pricing power and operating margins, which hit all-time highs in the past two years, are unsustainable,” she said. “Even without a recession, the mean reversion of profits in 2023 translates to a 10%-to-15% decline from current estimates.”


    MORGAN STANLEY WEALTH MANAGEMENT NOTE DATED OCT. 17 2022

    Unprecedented monetary and fiscal stimulus during the throes of the pandemic had led to the largest U.S. companies booking record operating margins that were 150 to 200 basis points above norms seen in the past decade, according to Shalett. 

    See: Stock market’s wild gyrations put earnings in focus as inflation crushes Fed ‘pivot’ hopes

    She said that company profits may now be imperiled by slowing growth, with “demand skewing toward services” after pulling forward toward goods earlier in the pandemic, and a likely reversal in “extremely strong” pricing power as the Fed fights surging inflation with interest-rate hikes.

    “Such risks are not discounted in 2023 consensus yet, constituting a material risk to stocks for the remainder of the year,” Shalett said.

    While many sectors have discounted the potential drop in 2023 profits from current estimates that could stir headwinds even with no recession, “the megacap secular growth stocks that dominate market-cap indexes have not,” she warned. “And those indexes are where risk gets repriced in the bear market’s final stages.”

    Morgan Stanley’s chief U.S. equity strategist Mike Wilson estimates as much as 11% downside from consensus estimates, with his base-case, earnings-per-share forecast for the S&P 500 for 2023 being $212, according to Shalett’s note. 

    U.S. stocks were bouncing Monday, with major stock benchmarks trading sharply higher in the afternoon, after sinking Friday amid inflation concerns as earnings season got under way. The S&P 500
    SPX,
    +2.65%
    was up 2.7% in afternoon trading, while the Dow Jones Industrial Average
    DJIA,
    +1.86%
    gained 1.9% and the technology-heavy Nasdaq Composite surged 3.5%, FactSet data show, last check. 

    In the bond market, Treasury rates were trading slightly lower Monday afternoon, after the 2-year yield hit a 15-year high and the 10-year yield notched a 14-year high on Friday, according to Dow Jones Market Data. Two-year yields ended last week at 4.507%, the highest level since August 8, 2007 based on 3 p.m. Eastern time levels, while the 10-year rate climbed to 4.005% for its highest rate since Oct. 15, 2008.

    The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.992%
    was down about 1 basis point Monday afternoon at around 4%, while two-year yields
    TMUBMUSD02Y,
    4.439%
    fell about five basis points to around 4.45%, FactSet data show, at last check.

    Meanwhile, as investors capitulated to higher inflation, “peak policy rates moved up aggressively in the fed funds futures market, with the terminal rate now at nearly 5%, an aggressive stance that smacks of ‘peak hawkishness,’” according to the Morgan Stanley note.

    “Critically, although the market is still pricing 1.5 cuts in 2023, the January 2024 fed-funds rate is estimated at 4.5%, a comfortable 100 basis points above our forecast” for core inflation measured by the consumer-price index, Shalett wrote.

    “Consider locking in solid short-term yields in bonds and shoring up positions in high growth, dividend-paying stocks,” she said. “Short-duration Treasuries look attractive, especially because the yield is more than 2.5 times that of the dividend yield on the S&P 500.”

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  • These 11 stocks can lead your portfolio’s rebound after the S&P 500 ‘earnings recession’ and a market bottom next year

    These 11 stocks can lead your portfolio’s rebound after the S&P 500 ‘earnings recession’ and a market bottom next year

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    This may surprise you: Wall Street analysts expect earnings for the S&P 500 to increase 8% during 2023, despite all the buzz about a possible recession as the Federal Reserve tightens monetary policy to quell inflation.

    Ken Laudan, a portfolio manager at Kornitzer Capital Management in Mission, Kan., isn’t buying it. He expects an “earnings recession” for the S&P 500
    SPX,
    +2.78%
    — that is, a decline in profits of around 10%. But he also expects that decline to set up a bottom for the stock market.

    Laudan’s predictions for the S&P 500 ‘earnings recession’ and bottom

    Laudan, who manages the $83 million Buffalo Large Cap Fund
    BUFEX,
    -2.86%
    and co-manages the $905 million Buffalo Discovery Fund
    BUFTX,
    -2.82%    ,
    said during an interview: “It is not unusual to see a 20% hit [to earnings] in a modest recession. Margins have peaked.”

    The consensus among analysts polled by FactSet is for weighted aggregate earnings for the S&P 500 to total $238.23 a share in 2023, which would be an 8% increase from the current 2022 EPS estimate of $220.63.

    Laudan said his base case for 2023 is for earnings of about $195 to $200 a share and for that decline in earnings (about 9% to 12% from the current consensus estimate for 2022) to be “coupled with an economic recession of some sort.”

    He expects the Wall Street estimates to come down, and said that “once Street estimates get to $205 or $210, I think stocks will take off.”

    He went further, saying “things get really interesting at 3200 or 3300 on the S&P.” The S&P 500 closed at 3583.07 on Oct. 14, a decline of 24.8% for 2022, excluding dividends.

    Laudan said the Buffalo Large Cap Fund was about 7% in cash, as he was keeping some powder dry for stock purchases at lower prices, adding that he has been “fairly defensive” since October 2021 and was continuing to focus on “steady dividend-paying companies with strong balance sheets.”

    Leaders for the stock market’s recovery

    After the market hits bottom, Laudan expects a recovery for stocks to begin next year, as “valuations will discount and respond more quickly than the earnings will.”

    He expects “long-duration technology growth stocks” to lead the rally, because “they got hit first.” When asked if Nvidia Corp.
    NVDA,
    +6.14%
    and Advanced Micro Devices Inc.
    AMD,
    +3.69%
    were good examples, in light of the broad decline for semiconductor stocks and because both are held by the Buffalo Large Cap Fund, Laudan said: “They led us down and they will bounce first.”

    Laudan said his “largest tech holding” is ASML Holding N.V.
    ASML,
    +3.79%    ,
    which provides equipment and systems used to fabricate computer chips.

    Among the largest tech-oriented companies, the Buffalo Large Cap fund also holds shares of Apple Inc.
    AAPL,
    +3.09%    ,
    Microsoft Corp.
    MSFT,
    +3.88%    ,
    Amazon.com Inc.
    AMZN,
    +6.63%
    and Alphabet Inc.
    GOOG,
    +3.91%

    GOOGL,
    +3.73%    .

    Laudan also said he had been “overweight’ in UnitedHealth Group Inc.
    UNH,
    +1.77%    ,
    Danaher Corp.
    DHR,
    +2.64%
    and Linde PLC
    LIN,
    +2.25%
    recently and had taken advantage of the decline in Adobe Inc.’s
    ADBE,
    +2.32%
    price following the announcement of its $20 billion acquisition of Figma, by scooping up more shares.

    Summarizing the declines

    To illustrate what a brutal year it has been for semiconductor stocks, the iShares Semiconductor ETF
    SOXX,
    +2.12%    ,
    which tracks the PHLX Semiconductor Index
    SOX,
    +2.29%
    of 30 U.S.-listed chip makers and related equipment manufacturers, has dropped 44% this year. Then again, SOXX had risen 38% over the past three years and 81% for five years, underlining the importance of long-term thinking for stock investors, even during this terrible bear market for this particular tech space.

    Here’s a summary of changes in stock prices (again, excluding dividends) and forward price-to-forward-earnings valuations during 2022 through Oct. 14 for every stock mentioned in this article. The stocks are sorted alphabetically:

    Company

    		 Ticker

    		 2022 price change

    		 Forward P/E

    		 Forward P/E as of Dec. 31, 2021
    Apple Inc.

    		 AAPL,
    +3.09%         		-22%

    		 22.2

    		 30.2
    Adobe Inc.

    		 ADBE,
    +2.32%         		-49%

    		 19.4

    		 40.5
    Amazon.com Inc.

    		 AMZN,
    +6.63%         		-36%

    		 62.1

    		 64.9
    Advanced Micro Devices Inc.

    		 AMD,
    +3.69%         		-61%

    		 14.7

    		 43.1
    ASML Holding N.V. ADR

    		 ASML,
    +3.79%         		-52%

    		 22.7

    		 41.2
    Danaher Corp.

    		 DHR,
    +2.64%         		-23%

    		 24.3

    		 32.1
    Alphabet Inc. Class C

    		 GOOG,
    +3.91%         		-33%

    		 17.5

    		 25.3
    Linde PLC

    		 LIN,
    +2.25%         		-21%

    		 22.2

    		 29.6
    Microsoft Corp.

    		 MSFT,
    +3.88%         		-32%

    		 22.5

    		 34.0
    Nvidia Corp.

    		 NVDA,
    +6.14%         		-62%

    		 28.9

    		 58.0
    UnitedHealth Group Inc.

    		 UNH,
    +1.77%         		2%

    		 21.5

    		 23.2
    Source: FactSet

    You can click on the tickers for more about each company. Click here for Tomi Kilgore’s detailed guide to the wealth of information available free on the MarketWatch quote page.

    The forward P/E ratio for the S&P 500 declined to 16.9 as of the close on Oct. 14 from 24.5 at the end of 2021, while the forward P/E for SOXX declined to 13.2 from 27.1.

    Don’t miss: This is how high interest rates might rise, and what could scare the Federal Reserve into a policy pivot

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  • U.S. stocks edge up despite higher-than-expected inflation data

    U.S. stocks edge up despite higher-than-expected inflation data

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    U.S. stock indexes edged higher on Wednesday, while hotter-than-expected producer price inflation data deepened concerns that the Federal Reserve may continue its aggressive interest rate hikes.

    How are stock-index futures trading
    • The Dow Jones Industrial Average 
      DJIA,
      +0.50%
       was up 120 points, or 0.4% to around 29,355

    • The S&P 500 
      SPX,
      +0.35%
      gained 5.3 points, or 0.2% to about 3,594

    • The Nasdaq Composite
      COMP,
      -6.31%
      traded 5.1 points, or 0.1% higher to 10,430

    On Tuesday, the Dow Jones Industrial Average rose 36 points, or 0.12%, to 29239, the S&P 500 declined 24 points, or 0.65%, to 3589, and the Nasdaq Composite dropped 116 points, or 1.1%, to 10426. The S&P 500 closed down 1,177 points, or 24.7% for the year to date.

    What’s driving markets

    The 12-month rate of producer price inflation slowed to to 8.5% from 8.7% while the annual core rate, excluding food and energy, was unchanged at 5.6%, but the monthly rate rose 0.4% in September, above forecast, and the monthly core PPI was also up 0.4% in September.

    Such data has worsened fears that to curb inflation, the Fed will continue its aggressive rate hikes, which may steer the U.S. economy into a recession.

    “We believe the odds of a recession in 2023 are now better than 50%,” Greg Bassuk, chief executive at AXS Investments, wrote in a Wednesday note. “Last week’s market turbulence saw volatility at levels we have not seen since July, and we believe investors should brace for ongoing market volatility and uncertainty throughout Q4, in concert with another likely Fed interest rate hike to the tune of 0.75% in November,” according to Bassuk.

    The 10-year Treasury yield BX:TMUBMUSD10Y, which started the year around 1.65% was trading at 3.931% on Wednesday, off 1.3 basis points, after the producer price inflation data.

    Traders are also awaiting U.S. September consumer prices data on Thursday due at 8:30 am Eastern Time.

    “Inflation has proven to be difficult to forecast and given the negative ‘shock’ from the August CPI, it would be difficult for any investor to have conviction going into this report,” according to Tom Lee, head of research at Fundstrat.

    “For us, analyzing the month over month numbers is much more important than looking at the headline,” Zachary Hill, head of portfolio management at Horizon Investments, said in an interview.

    “The way we’ve been thinking about it, the last three months annualized [inflation] gives you a kind of a decent idea of where the shorter term trends are around inflation,” Hill said. “We think that’s what the Fed is going to be looking at to see progress towards their 2% goal. And unfortunately, based on various measures, we’re nowhere near that today.”

    Adding to the market anxiety, and keeping any Wednesday rally in check, is the continuing volatility in U.K. government bonds after the Bank of England reiterated it would stop supporting the market after Friday.

    Investors have become increasingly concerned of late that severe stresses in the financial system may emerge as central banks switch from the era of zero or negative interest rates to sharply higher borrowing costs as they try to tackle inflation at multi-decade highs.

    “[G]lobal financial conditions have tightened as central banks continue to raise interest rates. Our latest Global Financial Stability Report shows that financial stability risks have increased since our last report, with the balance of risks tilted to the downside,” said the International Monetary Fund in a report released on Tuesday.

    “The mood of global investors was gloomy enough and hardly needed yesterday’s reminder from the IMF that the risks to financial stability have increased,” Ian Williams, strategist at Peel Hunt, noted. “Its report highlighted specifically (if obviously) the threats from persistent inflation, China’s slowdown and the war in Ukraine. The highlighted ‘disorderly repricing of risk’ is arguably already underway.”

    The Fed may offer its view on the topic as a number of officials are due to give comments on Wednesday. Minneapolis Fed President Neel Kashkari said the Fed is “dead serious” about getting inflation down. Fed vice chair Michael Barr will speak at 1:45 p.m. The minutes of the Fed’s previous monetary policy setting meeting will be released at 2 p.m. ET and Fed governor Michelle Bowman will deliver comments at 6.30 pm.

    Companies in focus
    • Shares of Philips
      PHIA,
      -12.27%

      PHG,
      -11.33%
      plunged 12% after the Dutch tech company issued its second profit warning this year, forewarning that supply chain problems will impact sales and third-quarter profits.

    • Intel Corp.
      INTC,
      +1.50%
      may fire thousands of workers by the end of the month, around the same time the chip manufacturer reports quarterly results amid a tough year for semiconductor makers, Bloomberg reported late Tuesday. The company’s shares rose 1% Wednesday.

    • Shares of PepsiCo Inc. climbed 4.6% Wednesday, after the beverage and snack giant reported third-quarter profit and revenue that rose above expectations and raised its full-year outlook, as higher prices helped offset some volume weakness.

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  • Most U.S. Voters Want Products Free of Harmful Chemicals: Poll

    Most U.S. Voters Want Products Free of Harmful Chemicals: Poll

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    By Sydney Murphy HealthDay Reporter

    HealthDay Reporter

    TUESDAY, Oct. 11, 2022 (HealthDay News) — Do the majority of Americans want government to make sure the products they buy are free of harmful chemicals?

    Yes, a new survey shows, and they are even willing to pay more to get that assurance of safety.

    “At a time when most issues are politically polarized, the issue of keeping people safe from harmful chemicals finds widespread agreement among Democrats, Republicans and Independent voters,” said Celinda Lake, president of Lake Research Partners, which conducted the poll. The Program on Reproductive Health and the Environment (PRHE) at the University of California, San Francisco (UCSF), commissioned the survey.

    More than 90% of those polled wanted the U.S. government to require products to be screened for harmful chemicals and proven safe before market approval. The survey, conducted between May 25 and June 5, gathered 1,200 responses from registered American voters.

    The survey found:

    • 92% of voters agreed, and 63% of voters strongly agreed, that the U.S. government should make companies prove that their products are safe before selling them.
    • 93% of voters agreed, and 62% strongly agreed, that companies should do a better job of getting rid of harmful chemicals from consumer products.
    • 88% of voters agreed that companies should do a better job of taking plastics out of consumer products and reducing their use of plastic packaging.
    • 76% of the Americans who took the survey said they were worried about how chemicals and plastics contribute to climate change.
    • 54% of those polled said that chemical regulations are not strong enough, while 21% said they are about right and 10% said they are too strong.
    • The Toxic Substances Control Act makes it easier to limit or ban harmful chemicals to better protect vulnerable people like pregnant women, children and people who live near factories that are polluting the surrounding area: 89% of voters supported the act, and 56% of them strongly supported it.
    • 93% of voters agreed, and 57% strongly agreed, that it is important to get rid of harmful chemicals where people live, work and go to school, even if it makes some products more expensive. A similar number agreed that it is important for companies to keep harmful chemicals out of everyday products, even if it increases the cost of the products.
    • Voters were worried about all of the chemicals asked about in the survey, but they were most concerned about chemicals that they ate, drank or breathed in. Still, they did not know how the system for regulating chemicals works.
    • About half of people (49%) said that the chemicals in food and consumer goods have been tested to make sure they are safe, which is not true.

    “People assume that what they buy is safe, and that almost always isn’t the case,” said Tracey Woodruff, a professor of obstetrics, gynecology and reproductive sciences who directs the PRHE at UCSF. “The good news is this survey reveals overwhelming support for the government to do a better job of protecting people from harmful chemicals.”

    More information

    The Environmental Working Group has more about chemicals in consumer products.

     

    SOURCE: University of California, San Francisco, news release, Oct. 11, 2022

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  • Nasdaq closes at 2-year low after stocks fail to shake off Fed rate-hike gloom

    Nasdaq closes at 2-year low after stocks fail to shake off Fed rate-hike gloom

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    AP

    U.S. stocks finished with losses on Monday, sending the Nasdaq Composite to its lowest close in more than two years, after investors failed to shake off worries about further Federal Reserve rate hikes and JPMorgan Chase & Co.’s Jamie Dimon warned of a potential 20% decline in the S&P 500.

    How stocks traded
    • The Dow
      DJIA,
      -0.32%
      closed down by 93.91 points, or 0.3% at 29,202.88.

    • The S&P 500
      SPX,
      -0.75%
      finished down by 27.27 points, or 0.8%, at 3,612.39.

    • The Nasdaq Composite gave up 110.30 points, or 1%, to end at 10,542.10 — the lowest close since July 28, 2020.

    Monday’s declines exacerbated losses which occurred at the end of last week. On Friday, the Dow fell 630 points, or 2.1%, the S&P 500 declined 2.8%, and the Nasdaq Composite dropped 3.8%. The Nasdaq Composite was down 31.9% for the year to date through Friday.

    What drove markets

    Major indexes finished lower for a fourth consecutive session on Monday as concerns about additional rate hikes by the Fed continued to damp sentiment. Dow industrials, the S&P 500 and the Nasdaq all fell to session lows after a CNBC interview with Dimon, chief executive of JPMorgan
    JPM,
    -0.93%    ,
    who said the S&P 500 could fall by “another easy 20%” from current levels.

    Read: Here are the 5 times traders and stock-market investors got fooled by Fed ‘pivot’ hopes in past year

    Soft data a week ago had raised hopes that the Fed would soon pause its monetary tightening cycle in its battle to suppress multidecade high inflation, and the market subsequently rebounded off its near two-year lows. But a strong jobs report on Friday crushed that Fed “pivot” narrative and stocks plunged again.

    On Monday, the CBOE Vix index
    VIX,
    +3.48%    ,
    a gauge of expected S&P 500 volatility, sat at 32.15, well above its long-term average of 20.

    “The low interest-rate environment forced investors to chase yield and bid up the asset prices too high. Eventually the market is fair and asset values have to achieve some sense of common ground or base level valuation. So it was inevitable that this valuation correction would happen,” said Siddharth Singhai, chief investment officer for New York-based hedge fund IronHold Capital.

    “Panic will swing the market towards excessive pessimism and then the valuations will be too cheap. That hasn’t happened yet. Upcoming rate hikes will most likely be a catalyst for panic, however,” he wrote in an email to MarketWatch on Monday.

    Coming into Monday’s session, trading had been expected to be somewhat thinned by the Columbus Day and Indigenous People’s Day holiday, which closed the Treasury market.

    Now, traders are looking toward more data later in the week for further guidance on Fed thinking and equity valuations. The U.S. producer price numbers will be released on Wednesday and the consumer prices report on Thursday, the last of their kind before the Fed’s policy decision on Nov. 2.

    Then on Friday, third-quarter corporate earnings season really kicks into gear when big banks like JPMorgan
    JPM,
    -0.93%
    and Citigroup
    C,
    -1.40%
    present their numbers.

    Read: JPMorgan, Citi, Morgan Stanley and Wells Fargo kick off bank earnings season in choppy waters and S&P 500 would be in an ‘earnings recession’ if not for this one booming sector — but that may not last long

    Investors were also keeping an eye on the strong U.S. dollar, which is considered a drag on the earnings of U.S. multinationals. The dollar index
    DXY,
    +0.25%
    rose 0.3% to 113.12 as the euro intermittently broke below $0.97 after Russia sent missiles into cities across Ukraine.

    See: A rampaging U.S. dollar is wreaking havoc in financial markets. Here’s why it’s so hard to stop it.

    “We expect a lot more volatility in markets for the remainder of the year as the inevitability of higher rates sinks in and the economic consequences become more pronounced,” said Arthur Laffer Jr., president of Nashville-based Laffer Tengler Investments. Fed Chairman Jerome Powell “will not be a very popular person but it seems his legacy is focused on fighting any resurgence of 1970s inflation in the U.S. at all costs.”

    Companies in focus
    • Rivian Automotive Inc.
      RIVN,
      -7.28%
      intends to recall about 13,000 vehicles due to a possible safety issue that has so far been found to have affected several units, the company said Friday night. Shares finished down by 7.3%.

    • Tesla Inc.
      TSLA,
      -0.05%
      reported record monthly sales of China-made electric vehicles in September, as it continues to ramp production in the world’s number-two economy. The electric-vehicle maker delivered 83,135 EVs from its Shanghai plant in September, an 8% rise from August, according to a report by the China Passenger Car Association. Tesla shares nonetheless finished down by less than 0.1%.

    –— Jamie Chisholm contributed to this article.

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  • Stock futures struggle for direction amid Fed rate-hike gloom

    Stock futures struggle for direction amid Fed rate-hike gloom

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    U.S. stock futures were looking for direction Monday as worries about Fed rate rises persisted, with major indexes trading not far off their 2022 lows set at the end of last month.

    Investors were looking ahead to key inflation data due later this week, as well as minutes of the Fed’s September policy meeting and the start of earnings season.

    How stocks are trading
    • S&P 500 futures
      ES00,
      -0.04%
      erased earlier losses to tick up 3.50 points, or 0.1%, to 3,656.75.

    • Dow Jones Industrial Average futures
      YM00,
      +0.34%
      rose 63 points, or 0.2%, to 29,416.

    • Nasdaq 100 futures
      NQ00,
      -0.54%
      were down 9.50 points, or 0.1%, at 11,092.

    On Friday, the Dow Jones Industrial Average
    DJIA,
    +0.11%
    fell 630 points, or 2.1%, the S&P 500
    SPX,
    -0.31%
    declined 2.8%, and the Nasdaq Composite
    COMP,
    -2.61%
    dropped 3.8%. The Nasdaq Composite was down 31.9% for the year to date through Friday.

    What’s driving markets

    U.S. stocks were in line for a fourth consecutive session of losses as concerns about additional interest rate rises by the Federal Reserve continued to dampen sentiment.

    Trading was expected to be somewhat thinned by the Columbus Day and Indigenous People’s Day holiday, which closed the Treasury market.

    Soft data a week ago raised hopes that the Fed would soon pause its monetary tightening cycle in its battle to suppress multi-decade high inflation, and the market subsequently rebounded off its near two-year lows. But a strong jobs report on Friday crushed that Fed “pivot” narrative and stocks plunged again.

    See: Why stock-market investors keep falling for Fed ‘pivot’ talk — and what it will take to put in a bottom

    The 5-day round trip saw an average move for the S&P 500 of 1.9%. Little surprise then that the CBOE Vix index
    VIX,
    +5.20%    ,
    a gauge of expected S&P 500 volatility, sat on Monday at 31.4, more than 50% above its long term average of 20.

    “The market response to Friday’s U.S. jobs report was characteristic of a bear market in equities. U.S. indices reversed sharply in the absence of the bad economic news required to shake the Fed’s hawkish determination,” said Ian Williams, strategist at Peel Hunt.

    Now traders will look toward more data due later in the week for further guidance on Fed thinking and equity valuations.

    The U.S. producer price numbers will be released on Wednesday and the consumer prices report on Thursday, the last of their kind before the Fed’s rate-setting meeting on Nov. 2.

    Then on Friday, third-quarter corporate earnings season really kicks into gear when big banks like JPMorgan
    JPM,
    +0.47%
    and Citigroup
    C,
    -0.31%
    present their numbers.

    Read: JPMorgan, Citi, Morgan Stanley and Wells Fargo kick off bank earnings season in choppy waters

    “The estimated earnings growth rate for the S&P 500 is 2.4%. If 2.4% is the actual
    growth rate for the quarter, it will mark the lowest earnings growth rate reported by the index since Q3 2020 (-5.7%),” said John Butters, senior earnings analyst at Factset.

    Further hurting risk appetite on Monday was additional gains for the dollar, whose strength is considered a drag on the earnings of U.S. multinationals. The dollar index
    DXY,
    +0.28%
    rose 0.3% to 113.15 as the euro broke back below $0.97 after Russia sent missiles into cities across Ukraine.

    Companies in focus
    • Rivian Automotive Inc.
      RIVN,
      -8.25%
      intends to recall about 13,000 vehicles due to a possible safety issue that has so far been found to have impacted several units, the company said Friday night. Shares were down 7.1% in premarket trade.

    • Tesla Inc.
      TSLA,
      +0.06%
      reported record monthly sales of China-made electric vehicles in September, as it continues to ramp production in the world’s number-two economy. The electric-vehicle maker delivered 83,135 EVs in September, an 8% rise from August, according to a report by the China Passenger Car Association on Sunday. Tesla shares were down 0.2%.

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  • Will the stock market be open on Columbus Day?

    Will the stock market be open on Columbus Day?

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    It’s a regular day of business for the U.S. stock market on Monday, October 10, as equity exchanges stay open for Columbus Day, a federal holiday that also has been recognized as Indigenous Peoples’ Day.

    Bond markets, however, take the day off, which means a long weekend for the Treasury market, corporate bonds and other forms of tradable debt, starting after the close of business on Friday.

    Stocks have endured a brutal selloff in the first nine months of the year as the Federal Reserve has worked to fight inflation that’s been stuck near it highest levels since the early 1980s.

    See: Why stock-market bulls keep falling for Fed ‘pivot’ feints — and what it will take to put in a bottom

    The central bank’s main tool to battle inflation has been to dramatically increase interest rates, while also shrinking its balance sheet, in an effort to tighten financial conditions and squelch demand for goods and services, while also bringing down stubbornly high costs of living, including food, shelter and energy prices.

    The Fed’s focus in recent months also has been on cooling the roaring labor market, with strong wage gains in the past year viewed as one of several culprits behind elevated inflation.

    Friday’s jobs report for September pegged the unemployment rate as matching a prepandemic low of 3.5%, dashing hopes for now of a significant trend toward a pullback in the labor market.

    The S&P 500 index
    SPX,
    -2.80%
    tumbled 2.8% on Friday, the Dow Jones Industrial Average
    DJIA,
    -2.11%
    fell 630.15 points, or 2.1%, and the Nasdaq Composite Index
    COMP,
    -3.04%
    dropped 3.8%. An early October rally had offered some hope for a bounce for stocks, after a brutal first nine months for investors.

    Bonds also have undergone a painful repricing this year as volatility tied to the Fed’s monetary tightening campaign has eroded the value of bonds issued in the past decade of low rates.

    Read: Bond markets facing historic losses grow anxious about Fed that ‘isn’t blinking yet’

    The S&P 500 is down about 24% for the year, while the Dow is off 19% and the Nasdaq nearly 32%.The 10-year Treasury rate
    TMUBMUSD10Y,
    3.889%
    was near 3.9% Friday, after recently touching 4%, it’s highest since 2010

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  • U.S. stocks finish choppy session with losses, snap 2-day winning streak as investors assess positive economic data

    U.S. stocks finish choppy session with losses, snap 2-day winning streak as investors assess positive economic data

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    U.S. stock indexes ended modestly lower on Wednesday, despite briefly turning positive in the final hour of trading, while data showed steady growth in private-sector jobs and in the service sector, indicating more scope for the Federal Reserve to continue to raise interest rates.

    How stocks traded?
    • The Dow Jones Industrial Average
      DJIA,
      +0.03%
      lost 42.45 points, or 0.1%, to finish at 30,273.87

    • The S&P 500
      SPX,
      +0.21%
      was off 7.65 points, or 0.2%, ending at 3,783.28

    • The Nasdaq Composite
      COMP,
      +18.82%
      shed 27.77 points, or 0.2%, to end at 11,148.64

    On Tuesday, the Dow jumped 825 points, or 2.8%, while the S&P 500 increased 3.1% and the Nasdaq Composite rallied 3.3%.

    What drove markets?

    Wall Street stocks finished in the red after three main indexes bounced back from earlier losses in the final hour of trade, following a strong September private employment report in the morning.

    Data released Wednesday showed that private-sector payrolls rose by 208,000 in September, indicating steady growth and supporting the view that the Fed has enough scope to keep raising interest rates. Economists surveyed by The Wall Street Journal had expected a rise of 200,000.

    The report came two days before the closely watched nonfarm payrolls data issued by the Bureau of Labor Statistics. Investors are eying on it for important guidance on the Fed’s policy stance in the November meeting.

    Friday’s employment report is expected to show the economy added 275,000 jobs in September, compared with 315,000 new positions added in August, according to a survey polled by Dow Jones.

    See: Hiring and job creation seen falling to a 1 1/2-year low in U.S. September jobs report

    “That certainly could move the needle,” said Kristina Hooper, chief global market strategist at Invesco. “Again, it doesn’t mean that it actually is going to change the market, but it could be the catalyst for short term rally if we get a disappointing jobs report.”

    “But keep in mind, that’s just the anticipation of a Fed pivot based on data. But that does not ensure a Fed pivot. And so it could be one of those short-term rallies like the one we saw earlier this week,” Hooper said.

    In other data Wednesday, an ISM barometer of U.S. business conditions in the service sector dipped to 56.7% in September but still showed steady growth and rising employment in a sign the economy is still expanding.

    The U.S. trade deficit in August fell to $67.4 billion, the lowest level since mid 2021, paving the way for a resumption of growth in gross domestic product in the third quarter.

    See: Why investors shouldn’t expect a break from the stock-market whiplash, says this strategist

    The S&P 500 had just enjoyed its largest two day percentage gain since April 2020 on Monday and Tuesday, and the best start to a quarter since 1938, according to Dow Jones Market data.

    The bounce followed three quarters of declines, the worst such run since 2008, during which time the S&P 500 fell 24.8% to a near two-year trough as investors worried that the Federal Reserve’s interest rate hikes to crush inflation would harm the economy.

    Brian Mulberry, client portfolio manager at Zacks Investment Management, believes the volatility in the stocks will continue because markets are getting a very “consistent message” from the Fed.

    “Given what has happened over the last five trading sessions alone, we would be basically telling our clients to tighten your seatbelt a little bit because it’s definitely going to continue to be a bumpy ride,” Mulberry told MarketWatch in a phone interview on Wednesday. “If we get a ‘Goldilocks’ (jobs) report, that would mean decent economic activity is going on. That’s good for earnings overall in the market, but it’s not growing to a point where interest rates would have to be ratcheted up another 125 basis points by the end of the year.”

    See: The stock market is surging as the U.S. dollar retreats. It’s all about bonds.

    One major reason behind the rise early this week was the view that the Fed would pivot away from its aggressive monetary tightening.

    Johanna Chua, chief Asia economist at Citi, said that though U.S economic growth remained in better shape than other countries and Fed officials continued to sound hawkish, the market risked being wrongfooted by any signs that interest rates could soon peak.

    “Even as the overall fundamental setup has not changed… trimming of bearish risk/bearish rates/bullish USD positions has driven a sharp reversal,” Chua said.

    Mary Daly, president of the Federal Reserve Bank of San Francisco said Wednesday that the Federal Reserve needs to keep raising its benchmark interest rate in order to cool inflation that hit a 40-year high earlier this year and has shown little signs of cooling. Atlanta Fed President Raphael Bostic will speak at 4 p.m. Eastern.

    Meanwhile, the OPEC+ group said Wednesday that it will reduce its collective crude production levels by 2 million barrels a day starting next month, the biggest cut since the start of the pandemic. Oil futures headed higher with West Texas Intermediate crude for November delivery
    CL00,

     
    CLX22,

    rose $1.24, or 1.4%, to settle at $87.76 a barrel on the New York Mercantile Exchange.

    The S&P 500’s energy sector
    SP500.10,
    -0.07%
    rose 2.1% following the news, up 12.6% over the last three trading days. According to Dow Jones Market Data, it was the best three-day percentage gain since November 2020 when it gained 16.1%. Shares of Schlumberger 
    SLB,
    +0.77%
    gained 6.3% at the close, while Exxon Mobil
    XOM,
    +1.32%
    shares advanced 4%.

    Companies in focus
    • Shares of Helen of Troy Ltd. 
      HELE,
      -2.75%
      finished 3.4% higher Wednesday, after the consumer products company, with brands including OXO, Hydro Flask and Braun, reported fiscal second-quarter earnings that beat expectations but cut its full-year outlook, as rising inflation has prompted consumers to change their spending patterns.

    • Shares of Monopar Therapeutics Inc.
      MNPR,
      +6.36%
       gained 1.8% after the company said it completed enrollment in a Phase 2b clinical trial evaluating its experimental therapy aimed at preventing severe oral mucositis in patients undergoing chemoradiotherapy for oropharyngeal cancer.

    • Shares of Eiger BioPharmaceuticals Inc.
      EIGR,
      +0.85%
       tumbled 5% after the company said it will not pursue emergency authorization of its experimental treatment for mild and moderate COVID-19 infections.

    • Shares of Lamb Weston Holdings Inc.
      LW,
      +2.45%
       ended 4.2% higher Wednesday, after the potato supplier reported fiscal first-quarter profit that beat expectations, higher prices helped offset a volume decline.

    —Jamie Chisholm contributed reporting

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  • U.S. stock futures weaken after best start to a quarter since 1938

    U.S. stock futures weaken after best start to a quarter since 1938

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    U.S. stock index futures dipped on Wednesday as a more cautious tone prevailed following a strong start to the fourth quarter.

    How are stock index-futures trading
    • S&P 500 futures
      ES00,
      -0.80%
      dipped 31 points, or 0.8%, to 3772

    • Dow Jones Industrial Average futures
      YM00,
      -0.80%
      fell 242 points, or 0.8%, to 30123

    • Nasdaq 100 futures
      NQ00,
      -0.82%
      eased 90 points, or 0.8%, to 11550

    On Tuesday, the Dow Jones Industrial Average
    DJIA,
    +2.80%
    rose 825 points, or 2.8%, to 30316, the S&P 500
    SPX,
    +3.06%
    increased 113 points, or 3.06%, to 3791, and the Nasdaq Composite
    COMP,
    +7.79%
    gained 361 points, or 3.34%, to 11176. The Nasdaq Composite was up 5.7% from its 52-week closing low, but it remains down 28.6% for the year to date.

    What’s driving markets

    Wall Street was on course Wednesday for a relatively mild pullback, as stock index futures suffered some selling after a sturdy rally over the past two sessions.

    The S&P 500 has just enjoyed its largest two day percentage gain since April 2020, and the best start to a quarter since 1938, according to Dow Jones Market data.

    The bounce followed three quarters of declines, the worst such run since 2008, during which time the S&P 500 fell 24.8% to a near two-year trough as investors worried that the Federal Reserve’s interest rate hikes to crush inflation would harm the economy.

    However, recent soft U.S data, covering job openings and manufacturing, have encouraged some traders to trim bets on aggressive Fed interest rate rises.

    A week ago markets were forecasting the Fed’s benchmark interest rate would peak at nearly 4.8% by April 2023, but that figure has come down to 4.5%.

    Atlanta Fed President Raphael Bostic will speak at 4 p.m. Eastern.

    Johanna Chua, chief Asia economist at Citi, said that though U.S economic growth remained in better shape than other countries and Fed officials continued to sound hawkish, the market risked being wrongfooted by any signs that interest rates could soon peak.

    “Even as the overall fundamental setup has not changed… trimming of bearish risk/bearish rates/bullish USD positions has driven a sharp reversal,” Chua said.

    This view that oversold conditions and overly bearish sentiment was a key contributor to the latest advance was endorsed by Tom Lee, head of research at Fundstrat, though he accepted that bulls may be chastened by the recent past.

    “Given the generally poor win-ratio for rallies in 2022, investors are naturally viewing the gains over the past two days as just another ‘bear market rally’,” said Lee in a note to clients.

    Still, a number of shifting factors suggest the positive run could continue according to Lee.

    These included the dip in Fed fund futures; a 5% pullback in the dollar index
    DXY,
    +0.73%
    ; and the Vix volatility index
    VIX,
    +1.07%
    moving back below 30 with Vix futures back in contango.

    In addition: “the Nasdaq 100 was ‘100% bid’ Tuesday…since 1996, this has only happened 6 times, and 6 of 6 times the [Nasdaq 100] is higher 6M and 12M later with average gains of 27% and 34%,” said Lee.

    U.S. economic updates set for release on Wednesday include the September ADP employment report at 8:15 a.m.; international trade balance data for August at 8:30 a.m.; the September S&P Global service sector PMI survey at 9:45 a.m.; and the September ISM services report at 10 a.m.

    The ADP report sets up the market for heightened nervousness when the nonfarm payrolls data for September is published at the end of the week.

    “All eyes are on the employment data on Friday, which has priced in tremendous one day volatility in the options market,” said Stephen Innes, managing partner at SPI Asset Management.

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  • 21 dividend stocks yielding 5% or more of companies that will produce plenty of cash in 2023

    21 dividend stocks yielding 5% or more of companies that will produce plenty of cash in 2023

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    When the stock market has jumped two days in a row, as it has now, it is easy to become complacent.

    But the Federal Reserve isn’t finished raising interest rates, and recession talk abounds. Stock investors aren’t out of the woods yet. That can make dividend stocks attractive if the yields are high and the companies produce more cash flow than they need to cover the payouts.

    Below is a list of 21 stocks drawn from the S&P Composite 1500 Index
    SP1500,
    +3.12%
    that appear to fit the bill. The S&P Composite 1500 is made up of the S&P 500
    SPX,
    +3.06%    ,
    the S&P 400 Mid Cap Index
    MID,
    +3.18%
    and the S&P Small Cap 600 Index
    SML,
    +3.80%    .

    The purpose of the list is to provide a starting point for further research. These stocks may be appropriate for you if you are looking for income, but you should do your own assessment to form your own opinion about a company’s ability to remain competitive over the next decade.

    Cash flow is key

    One way to measure a company’s ability to pay dividends is to look at its free cash flow yield. Free cash flow is remaining cash flow after planned capital expenditures. This money can be used to pay for dividends, buy back shares (which can raise earnings and cash flow per share), or fund acquisitions, organic expansion or for other corporate purposes.

    If we divide a company’s estimated annual free cash flow per share by its current share price, we have its estimated free cash flow yield. If we compare the free cash flow yield to the current dividend yield, we may see “headroom” for cash to be deployed in ways that can benefit shareholders.

    For this screen, we began with the S&P Composite 1500, then narrowed the list as follows:

    • Dividend yield of at least 5.00%.

    • Consensus free cash flow estimate available for calendar 2023, among at least five analysts polled by FactSet. We used calendar-year estimates, even though fiscal years for many companies don’t match the calendar.

    • Estimated 2023 free cash flow yield of at least double the current dividend yield.

    For real-estate investment trusts, dividend-paying ability is measured by funds from operations (FFO), a non-GAAP figure that adds depreciation and amortization back to earnings. Adjusted funds from operations (AFFO) takes this a step further, subtracting cash expected to be used to maintain properties. So for the two REITs on the list, the FCF yield column makes use of AFFO.

    For many companies in the financial sector, especially banks and insurers, free cash flow figures aren’t available, so the screen made use of earnings-per-share estimates. These are generally considered to run close to actual cash flow for these heavily regulated industries.

    Here are the 21 companies that passed the screen, with dividend yields of at least 5% and estimated 2023 FCF yields at least twice the current payout. They are sorted by dividend yield:

    Company

    		 Ticker

    		 Type

    		 Dividend yield

    		 Estimated 2023 FCF yield

    		 Estimated “headroom”
    Uniti Group Inc.

    		 UNIT,
    +7.36%         		Real-Estate Investment Trusts

    		 8.33%

    		 25.25%

    		 16.92%
    Hanesbrands Inc.

    		 HBI,
    +5.56%         		Apparel/ Footwear

    		 8.33%

    		 17.29%

    		 8.96%
    Kohl’s Corp.

    		 KSS,
    +5.80%         		Department Stores

    		 7.68%

    		 16.72%

    		 9.04%
    Rent-A-Center Inc.

    		 RCII,
    +10.40%         		Finance/ Rental/ Leasing

    		 7.52%

    		 17.26%

    		 9.73%
    Macerich Co.

    		 MAC,
    +8.18%         		Real-Estate Investment Trusts

    		 7.43%

    		 18.04%

    		 10.60%
    Devon Energy Corp.

    		 DVN,
    +5.72%         		Oil & Gas Production

    		 7.13%

    		 14.47%

    		 7.33%
    AT&T Inc.

    		 T,
    +1.19%         		Major Telecommunications

    		 6.98%

    		 14.82%

    		 7.84%
    Newell Brands Inc.

    		 NWL,
    +5.16%         		Industrial Conglomerates

    		 6.59%

    		 17.42%

    		 10.82%
    Dow Inc.

    		 DOW,
    +2.96%         		Chemicals

    		 6.18%

    		 15.63%

    		 9.45%
    LyondellBasell Industries NV

    		 LYB,
    +3.64%         		Chemicals

    		 6.09%

    		 16.07%

    		 9.99%
    Scotts Miracle-Gro Co. Class A

    		 SMG,
    +5.01%         		Chemicals

    		 6.04%

    		 12.68%

    		 6.65%
    Diamondback Energy Inc.

    		 FANG,
    +5.23%         		Oil & Gas Production

    		 5.56%

    		 13.63%

    		 8.08%
    Best Buy Co. Inc.

    		 BBY,
    +5.86%         		Electronics/ Appliance Stores

    		 5.53%

    		 14.08%

    		 8.55%
    Viatris Inc.

    		 VTRS,
    +5.62%         		Pharmaceuticals

    		 5.50%

    		 28.95%

    		 23.45%
    Prudential Financial Inc.

    		 PRU,
    +5.66%         		Life/ Health Insurance

    		 5.38%

    		 13.30%

    		 7.91%
    Ford Motor Co.

    		 F,
    +7.76%         		Motor Vehicles

    		 5.23%

    		 15.95%

    		 10.72%
    Invesco Ltd.

    		 IVZ,
    +6.76%         		Investment Managers

    		 5.23%

    		 14.95%

    		 9.73%
    Franklin Resources Inc.

    		 BEN,
    +4.37%         		Investment Managers

    		 5.17%

    		 13.21%

    		 8.04%
    Kontoor Brands Inc.

    		 KTB,
    +0.73%         		Apparel/ Footwear

    		 5.17%

    		 14.15%

    		 8.98%
    Seagate Technology Holdings PLC

    		 STX,
    +4.09%         		Computer Peripherals

    		 5.11%

    		 13.19%

    		 8.07%
    Foot Locker Inc.

    		 FL,
    +1.35%         		Apparel/ Footwear Retail

    		 5.03%

    		 15.52%

    		 10.49%
    Source: FactSet

    Any stock screen has its limitations. If you are interested in stocks listed here, it is best to do your own research, and it is easy to get started by clicking the tickers in the table for more information about each company. Click here for Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote page.

    For the “estimated FCF yields,” consensus free cash flow estimates for calendar 2023 were used for all companies except the following:

    Don’t miss: Dividend yields on preferred stocks have soared. This is how to pick the best ones for your portfolio.

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  • It was the worst September for stocks since 2002. What that means for October.

    It was the worst September for stocks since 2002. What that means for October.

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    It was a September investors will remember — and not in a good way.

    A Friday drop left the S&P 500 and Dow Jones Industrial Average with their biggest monthly losses since March 2020. And it was the worst September performance for both indexes since 2002. Seasonally inclined investors may wonder what that means for October.

    Dow Jones Market Data took a look at how equities have done in the wake of particularly brutal Septembers.

    But first, how does the month just ended stack up? The S&P 500
    SPX,
    -1.51%
    fell 9.34%, while the Dow
    DJIA,
    -1.71%
    dropped 8.84% and the Nasdaq Composite
    COMP,
    -0.43%
    declined 10.5%. The Nasdaq’s drop marked its worst September performance since 2008.

    Deep Dive: These 20 stocks in the S&P 500 tumbled between 20% and 30% in September

    Sample size is limited. Not counting the current month, the S&P 500 has seen a September decline of 7% or more 11 times, according to data going back to 1928. The Dow has dropped 7% or more in September 13 times based on data back to 1928. The Nasdaq Composite has suffered a fall of 9% or more in September six times going back to 1986.

    See: Stocks and bonds are ‘discounting for a disaster’ after the worst stretch for investors in 20 years

    Dow Jones Market Data found that in Octobers that follow a 7% or larger fall in September, the S&P 500 rises 0.53% on average in October and sees a median gain of 1.81%. That’s better than the average for all Octobers at 0.47% and the median at 1.03%. October is positive in years following an outsize September loss 54.55% of the time, versus 57.45% for all Octobers (see table below).

    S&P 500
    Category

    		 7% or worse

    		 All
    Average

    		 0.53%

    		 0.47%
    Median

    		 1.81%

    		 1.03%
    Worst Performance

    		 -16.94%

    		 -21.76%
    Best Performance

    		 16.30%

    		 16.30%
    % of October’s higher

    		 54.55%

    		 57.45%

    Seasonal patterns, however, are only a guide. As MarketWatch’s Isabel Wang noted in a Friday report, many strategists are skeptical of October’s reputation as “bear killer.” They argued that a macroeconomic environment dominated by central banks aggressively tightening monetary policy in a bid to wring out inflation is likely to overshadow favorable seasonal factors.

    October is also associated with historical market crashes, including those in 1987 and 1929. The S&P 500 plunged nearly 17% in October 2008 following a 9.1% fall in September in the wake of the collapse of Lehman Brothers.

    Don’t miss: Stock-market bulls hope October will be another ‘bear killer.’ Why skeptics are unconvinced.

    Dow Jones Market Data, meanwhile, found that in Octobers following a September drop of 7% or more, the Dow has seen an average fall of 1.51% and a median drop of 1.46%. That compares with an average rise of 0.37% for all Octobers and a median gain of 0.79%. The S&P 500 has risen 46.15% of the time in Octobers that follow a 7% or more September decline, versus a rise 57.6% of the time for all Octobers (see table below).

    DJIA
    Category

    		 7% or worse

    		 All
    Average

    		 -1.51%

    		 0.37%
    Median

    		 -1.46%

    		 0.79%
    Worst Performance

    		 -20.36%

    		 -23.22%
    Best Performance

    		 10.60%

    		 10.65%
    % of October’s higher

    		 46.15%

    		 57.60%

    And here are the numbers for the Nasdaq in October following a September drop of 9% or more:

    Category

    		 9% or worse

    		 All
    Average

    		 2.19%

    		 0.73%
    Median

    		 4.26%

    		 2.16%
    Worst Performance

    		 -17.73%

    		 -27.23%
    Best Performance

    		 17.17%

    		 17.17%
    % of October’s higher

    		 50.00%

    		 54.90%

    Since 1950, September has been the worst performing month of the year for the Dow Jones Industrial Average, S&P 500 and Russell 1000 and the worst for the Nasdaq Composite since 1971 and the small-cap Russell 2000 since 1979, according to the Stock Trader’s Almanac.

    Stocks ended sharply lower on Friday after getting off to a choppy start.

    Need to Know: Short U.S. stocks and short-term Treasurys until Halloween, Bank of America strategist says

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