Stocks Soar After Oil Prices And Treasury Yields Fall
3:11 pm Wednesday, September 07th, 2022
The stock market closed higher today as the Nasdaq looks to break a seven-session losing streak. It’s fueled by a lingering feeling the market is due for a bounce from a short-term oversold situation. This narrative got support today from cooling market rates paired with falling oil costs. The dollar moderating, after a big run recently, is further boosting sentiment.
The US Dollar Index is at its low for the day, down 0.2% to 109.98. USD/JPY, which was up 1.5% earlier, is up 0.9% to 144.19. The EUR/USD is up 0.7% to 0.9970.
There was also a Wall Street Journal report this morning indicating the Fed is likely to raise the fed funds rate by 75 basis points at its September 20-21 FOMC meeting. Participants maintained a positive disposition nonetheless, and that resilience acted as another upside catalyst for the market on the basis that the rate hike has already been priced in.
There’s also been new hawkish Fed speak in play, which the market took in stride. Fed Vice Chair Brainard (FOMC voter) made comments indicating that the policy rate will need to rise further while Cleveland Fed President Mester (FOMC voter) reiterated her previous view that rates will need to be taken to a restrictive level and that she does not anticipate a rate cut in 2023.
Buying thus far is broad in nature with market breadth skewed heavily towards advancing issues. Advancers lead decliners by a 2-to-1 margin at the NYSE and a 3-to-2 margin at the Nasdaq.
The Vanguard Mega Cap Growth ETF (MGK) is up 1.2%; the Invesco S&P 500 Equal Weight ETF (RSP) is up 1.4%; the S&P 500 is up 1.1%.
There hasn’t been discrimination thus far between value and growth stocks. The Russell 3000 Growth Index (+0.7%) and Russell 3000 Value Index (+0.7%) exhibit similar gains.
Ten of the 11 S&P 500 sectors show gains with utilities (+2.4%) and consumer discretionary (+1.9%) leading the pack. Energy (-2.0%) is the lone holdout in negative territory amid falling oil prices.
Energy complex futures are noticeably lower today with WTI crude oil futures down 5.1% to $82.43/bbl. Natural gas futures are down 3.4% to $7.87/mmbtu.
Treasury yields are also down today. The 2-yr note yield is down four basis points to 3.47% while the 10-yr note yield is down six basis points to 3.28%.
