Main U.S. stock indexes gain momentum; all up >1%
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Materials lead S&P 500 sector gainers; energy sole loser
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Euro STOXX 600 index up ~0.8%
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Gold surges; bitcoin ~flat; dollar, crude dip
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U.S. 10-Year Treasury yield falls to ~4.14%
Nov 8 – Welcome to the home for real-time coverage of
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CONSUMERS ARE SPENDING, BUT SMALL BUSINESS GRUMPINESS GROWS
(1140 EST/1640 GMT)
The mood of small business owners has dimmed despite the
fact that American consumers continue to whip out their plastic.
The National Federation of Independent Business’ (NFIB)
Business Optimism index shaved 0.8 point last month
to land at 91.3.
Inflation remains the biggest thorn in the side of small
U.S. companies, with one-third of the survey’s respondents
citing inflation as their single “most important problem.”
“Small businesses continue to struggle with high input costs
and worker shortages as well as rising interest rates, factors
that will remain headwinds over coming months,” writes Rubeela
Farooqi, chief U.S. economist at High Frequency Economics.
Half of the participants anticipate hiking prices and owners
expecting business conditions to improve sank 2 points to a net
negative 46%.
“Owners continue to show a dismal view about future sales
growth and business conditions, but are still looking to hire
new workers,” says Bill Dunkelberg, NFIB’s chief economist.
“Inflation, supply chain disruptions, and labor shortages
continue to limit the ability of many small businesses to meet
the demand for their products and services.”
As illustrated below, the percentage of owners citing
inflation as the biggest thorn in their side and the percentage
who anticipate raising prices were marching in lock-step last
month, reflecting a growing skepticism that decades-hot price
growth will be contained any time soon.
It should be noted that the NFIB is a politically active
membership organization with a “conservative” bias, according to
The Center for Responsive Politics/opensecrets.org.
Separately, on Monday afternoon the Federal Reserve released
its data on consumer credit outstanding, which grew
at a decelerated $24.98 billion in September.
Non-revolving credit, which includes big-ticket items such
as cars and tuition, is up 5.7% year-on-year.
But revolving credit, encompassing credit card balances,
posted its smallest increase since May, and is now up 8.7% from
a year ago, down from a blistering 18.1% annual pace set in
August.
“It’s too soon to view increased use of revolving credit as
cause for concern,” says Matthew Martin, U.S. economist at
Oxford Economics. “While consumers may be using credit cards to
finance spending in the face of high inflation, the levels
remain relatively upbeat.”
Even so, the picture painted by the graphic below is not
without its ominous overtones.
The savings rate, often a barometer of consumer sentiment,
is well below pre-pandemic levels, while total revolving credit
outstanding is now 5.6% higher than the pre-pandemic peak.
The effects of the “great credit card paydown” that occurred
in the wake of shutdowns to contain COVID has been entirely
erased.
Wall Street stocks were green in late morning trading, with
all three major equity indexes gaining momentum as the session
wore on and Americans headed to the polls.
(Stephen Culp)
*****
WHETHER RED WAVE OR BLUE WAVE, TOUGH TO WASH AWAY THE ISSUES
(1045 EST/1545 GMT)
The U.S. equity market continues to face numerous issues,
though there has been some sudden resilience.
On Monday, shares of tech-titan Apple dismissed
negative stories to close in positive territory, and very near
to their high of the day.
Apple had announced on Sunday that COVID lockdowns at its
primary iPhone 14 production facility will result in reduced
shipments and longer delivery times.
Apple reported earnings less than two weeks ago, and it is
surprising to Mike O’Rourke, chief market strategist at
JonesTrading, that some of this would not have at least been
hinted at then.
To O’Rourke, Apple’s resilience is representative of the
tape as the S&P 500 has extended its post-FOMC bounce.
The index ended Monday back within 1% of its level at the time
the FOMC statement was released last Wednesday.
As O’Rourke sees it, although Fed Chair Powell stated the
inflation outlook has deteriorated since the September meeting
and rates are ultimately headed higher, the S&P 500 is again
above its closing level the day of the September FOMC meeting.
That said, O’Rourke notes that the U.S. 10-Year Treasury
yield is around 70 basis points higher, thus the
bond market received the message loud and clear.
In any event, O’Rourke suspects recent optimism is tied to
the market expectation that Republicans will post a strong
showing in Tuesday’s midterm elections.
“This expectation of Republican victories has been the
latest bullish market rationalization. Whether one looks at
inflation or public opinion polls it appears the nation is ready
to move on from single party control of the White House and both
Houses of Congress.”
Therefore, O’Rourke says that “in practicality,” President
Biden already appears to have lame duck status despite only
being halfway through his first term.
“A Republican sweep of both houses will cement that lame
duck status and provide the foundation for a political shift in
2024, but it does little near term to alleviate the current
monetary policy, economic and earnings challenges the financial
markets are facing. Furthermore, this week’s key market catalyst
won’t come until Thursday when the CPI report is released.”
(Terence Gabriel)
*****
WALL STREET A LITTLE HIGHER EARLY ON ELECTION DAY (0955
EST/1455 GMT)
Major U.S. stock indexes are slightly higher in choppy early
trading on U.S. Election Day Tuesday, with investors weighing
the possibility that the outcome could be a split U.S.
government.
Tech and materials are leading gains
among S&P 500 sectors.
With Republicans adding to momentum in polls and betting
markets, some see the GOP winning the House of Representatives
and possibly the Senate. That could cause policy problems for
Democratic U.S. President Joe Biden.
Final results of the election won’t be known until well
after the market’s close, but the midterm elections could create
moves in everything from energy companies to cannabis stocks.
Here is the market snapshot:
(Caroline Valetkevitch)
*****
NASDAQ COMPOSITE: THIS SUPPORT, SO FAR, SOLID (0900 EST/1400
GMT)
So far, the Nasdaq Composite appears to have found
solid support in the form of a Fibonacci retracement level of
its March 2020-November 2021 advance.
With this, there is potential for a double-bottom, on the
daily charts, which could lead to a trend reversal:
A double-bottom includes two nearby troughs that are roughly
equal.
On an intraday basis, the Nasdaq hit lows on Oct. 13 and
Nov. 4 at 10,088 and 10,262. Its lows on a closing basis were on
Oct. 14 and Nov. 3rd at 10,308 and 10,319.
Of note, since flirting with the 61.8% Fibonacci retracement
of the March 2020-November 2021 advance, at 10,291.289, in
mid-October, and again in early November, the IXIC has not
closed below this support level.
Meanwhile, a daily momentum study is exhibiting a
constructive convergence since its late September trough.
Despite, lower-Nasdaq-lows, the RSI is making higher-lows
suggesting building strength.
If the Composite can thrust above its Oct. 25 high, at
11,210.376, a bullish resolution to the double-bottom pattern
can suggest potential for further gains to challenge the
descending 200-day moving average, which ended Monday around
12,280.
An IXIC reversal, and close, below 10,291, however, can
suggest the pattern may be dissolving. The next support below
the 10,088 mid-October low is at the February 2020 high, at
9,838.
The 76.4%/78.6% Fibonacci retracement zone of the March
2020-November 2021 advance is in the 8,892/8,681 area.
(Terence Gabriel)
*****
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
