Stocks Pullback With Fedspeak, Jobs Jitters

Today’s trade skews more negative, but like yesterday, the market has shown some resilience to selling efforts as it contends with concerns that it has gotten ahead of itself in expecting a Fed policy pivot. Early selling efforts in the Treasury market pushed yields above Friday’s closing levels.

The 10-yr note yield hit 3.84% earlier and now sits at 3.81%. The 2-yr note yield is at its session high, up eight basis points to 4.21%. Notably, the US Dollar Index is up 1.0% to 112.19.

New hawkish Fed speak from Atlanta Fed President Bostic (2024 FOMC voter), who said the inflation fight is still in the early days, and Minneapolis Fed President Kashkari (2023 FOMC voter), who said he is not comfortable pausing until there is evidence of inflation cooling.

A CNBC report that a single, albeit very large, options trade was the likely catalyst for yesterday’s recovery trade, meaning the rebound effort did not have widespread sponsorship.

Some hesitation in front of the September Employment Situation Report on Friday.

Heightened geopolitical uncertainty after OPEC+ agreed to cut production by 2 million barrels per day starting in November, a move that has drawn sharp criticism from the White House.

Market breadth shows decliners leading advancers by a roughly 3-to-2 margin at the NYSE and a roughly 11-to-10 margin at the Nasdaq.

Most of the S&P 500 sectors trade down with utilities (-2.5%) and real estate (-2.3%) showing the steepest losses. Energy (+1.5%) sits atop the leaderboard thanks to WTI crude oil futures trading up 0.5% to $88.19/bbl.

Semiconductor stocks are a bright spot in the market with the PHLX Semiconductor Index up 0.4%.

Reviewing today’s economic data:

Initial jobless claims for the week ending October 1 increased by 29,000 to 219,000 (consensus 203,000) while continuing jobless claims for the week ending September 24 increased by 15,000 to 1.361 million.