Stocks Recover Sharply As Dollar Plunges
2:02 pm Wednesday, September 28th, 2022
Today’s trade has a decidedly positive disposition, bouncing from short-term oversold conditions. Falling Treasury yields are the biggest driving factor for the upside momentum. They are moving in response to a Bank of England (BoE) bond purchase announcement. The major indices all show sizable gains despite losses in Apple (AAPL) following a Bloomberg report that the company plans to hold back on increasing production of the iPhone 14.
The S&P 500, which set a new low for the year yesterday at 3623.29, is skirting the 3,700 level on the rebound effort.
The 10-yr note yield hit 4.01% overnight, but dropped noticeably when the BoE said it is going to postpone the sale of gilts slated to begin next week and instead carry out temporary purchases of UK government bonds between September 28 and October 14 in a bid to restore orderly market conditions. The 10-yr note yield is down 20 basis points to 3.77% and the 2-yr note yield is down 17 basis points to 4.14%.
The announcement also boosted the British pound, which fell considerably in recent days. GBP/USD +0.2% to 1.0750 and the U.S. Dollar Index is down 0.8% to 113.15.
Today’s rebound has many stocks moving higher, but Apple (AAPL) is being left behind following a Bloomberg report that indicates it’s pulling back on a plan to increase production of its iPhone 14 beyond its original target of 90 million units due to weaker-than-expected demand. Apple’s losses weigh on index level performance and limit gains for its S&P 500 sector, information technology (+0.1%), which is today’s top laggard having spent some time in negative territory earlier.
While information technology trades at the bottom of the pack, energy (+3.0%), communication services (+2.7%), and health care (+2.4%) sit atop the leaderboard.
Communication services is getting a boost from big gains in Netflix (NLFX) after the company received an upgrade to Overweight from Neutral at Atlantic Equities while health care is boosted by Biogen (BIIB). The company is soaring after reporting its early Alzheimer’s treatment drug, Lecanemab, met its Phase 3 clinical trial primary endpoint.
Market breadth reflects the broad nature of today’s rally effort. Advancers lead decliners by a 13-to-2 margin at the NYSE and a 10-to-3 margin at the Nasdaq.
Energy complex futures are moving higher this session as WTI crude oil futures trade up 3.7% to $81.34/bbl and natural gas futures trade up 1.1% to $6.83/mmbtu.
