Stocks Gains Further Momentum  as Key Earnings Loom

3:48 pm Monday, October 24th, 2022

The stock market was having a solid showing, building on last week’s gains, despite spending some time in negative territory early on. It’s the same story that’s played out in recent sessions, stocks are reacting to moves in the Treasury market. The 10-yr note yield was flirting with the 4.30% level earlier, but fell to 4.21%. This move coincided with the major averages lifting toward session highs, where they trade currently.

Notably, the stock market exhibited nice resilience even as the 10-yr yield reached its session high.

Market participants received weaker than expected preliminary Manufacturing and Services PMI data for October from IHS Markit, which fed into the growing narrative that the Fed might be inclined to take a less aggressive rate-hike approach in December and beyond.

One major sticking point in the market today has been Chinese stocks and U.S. stocks with high exposure to the Chinese market. This comes after Xi Jinping secured an unprecedented, third five-year term to serve as China’s leader. That wasn’t surprising, but it did come as a shock to many investors that he managed to surround himself only with loyalists who are apt to help him pursue tighter regulations and the continuation of China’s zero-Covid policy.

Alibaba (BABA) and Pinduoduo (PDD) are losing standouts for Chinese stocks while Las Vegas Sands (LVS) and Tesla (TSLA) also feel the pinch of concerns related to Xi’s power grab.

The latter two names are weighing down the S&P 500 consumer discretionary sector (-0.1%), which is the lone holdout in negative territory today. On the flip side, the health care (+1.9%) and industrials (+1.5%) sectors sit atop the leaderboard.

Economic data today was limited to the preliminary October IHS Markit Manufacturing PMI, which came in at 49.9 versus the prior reading of 52.0 and the preliminary October IHS Markit Services PMI came in at 46.6 versus the prior reading of 49.3.

Also, it has been reported that Rishi Sunak will be the next UK prime minister