Stocks Tank Before Key Fed Rate Decision
2:03 pm Tuesday, September 20th, 2022
The stock market is having a weak showing to this point on Tuesday. The major indices opened to decent losses before tumbling lower from there. Relative strength from a few mega cap names fueled an attempted rebound about an hour ago before more recent trading brought the stock market back down off its highs.
Factors pressuring investor sentiment include: rising Treasury yields, worrisome inflation data from Germany and Japan, and a Q3 earnings before interest and tax warning from Ford (F 13.38, -1.54, -10.4%) that was attributed to higher than expected supplier costs. There’s also an element of trepidation ahead of tomorrow’s FOMC interest rate decision, the release of an updated Summary of Economic Projections, and Fed Chair Powell’s press conference to explain the FOMC’s view of things.
The 2-yr note yield, which reached 3.99% overnight, now sits at 3.96%. The 10-yr note yield, which reached 3.60% overnight, now sits at 3.56%.
The sell-off is largely indiscriminate and bringing many stocks down. However, strength from a few mega caps, namely Apple (AAPL) and Tesla (TSLA), is limiting index level losses. The Vanguard Mega Cap Growth ETF (MGK) is down 0.7% versus a 1.7% loss in the Invesco S&P 500 Equal Weight ETF (RSP) and a 1.1% loss in the S&P 500.
Every S&P 500 sector trades down with losses ranging from 0.5% (information technology) to 2.1% materials).
Market breadth skews heavily towards declining issues. Decliners lead advancers by a greater than 5-to-1 margin at the NYSE and a roughly 5-to-2 margin at the Nasdaq.
WTI crude oil futures are back below $84.00/bbl, down 2.0% to $83.77/bbl. Natural gas futures are up 1.0% to $7.83/mmbtu.
Also, the US Dollar Index is up 0.4% to 110.14.
Today’s economic data was limited to the August Housing Starts and Building Permits report. Housing starts totaled 1.575 million (consensus 1.448 million) in August following a revised total of 1.404 million in July (from 1.446 million). Building permits came in at 1.517 million (consensus 1.610 million) in August after a revised count of 1.685 million in July (from 1.647 million).
