The Bond Market Is Doing Something Not Seen in Decades It Could Signal Trouble in the Stock Market. The Motley Fool

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Put another way, the firm’s profits have been growing faster than its shares. Those moves come as investors cheer recent data showing inflation is moving closer toward the Federal Reserve’s 2% target. Expectations of potential rate cuts in the new year have also lifted equities in recent weeks. Despite weaker volume, Tuesday’s moves likely signal a continuation of the positive market trends boosting major indices in recent weeks, said Keith Lerner, Truist’s co-chief investment officer. Stocks slid on Thursday after better-than-expected jobs data increased investors’ anxiety around the state of the economy and path of interest rates. Many economists now believe the Federal Reserve will thread the needle and achieve a soft landing, meaning policymakers will tame inflation without triggering a recession.

Specifically, an inversion between the 10-year and 3-month Treasury yields has preceded every recession since 1969, with only one false positive in the mid-1960s. Welcome to our coverage of the Dow Jones Industrial Average (DJIA) today, a key barometer of the U.S. stock market’s health.This page features a real-time Dow Jones futures chart. The earlier move up was in contrast to weaker stock prices and yields. Additionally, the minutes of the Federal Reserve’s June meeting, released Wednesday, showed that most officials would support more rate increases ahead. Cryptocurrency liquidity has been low for several months, continuing to exaggerate both up and down moves.

Edison International and Constellation Energy were the best performers, jumping 3% and 3%, respectively. “My expectation is that something is going to break in the system,” the president of Sri-Kumar Global Strategies told CNBC’s “Money Movers” on Tuesday. “Whether it comes from commercial real estate, whether it is going to be further bank failures, or whether it’s going to be a credit crunch. I think the impact is going to be failing.” The Nasdaq 100 gained 0.6% and notched an all-time high and record close, ending the session at 16,878.46. Government data showed that imports of goods and services into Australia increased by 2.5% month on month in May, while exports climbed 4.4%. Hong Kong-listed shares of Chinese banks were among the leading decliners in the Hang Seng index after Goldman Sachs reportedly downgraded its ratings for the top mainland lenders.

Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Wall Street-bullish contrarian ironfx review trading bias. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Trevor Jennewine has no position in any of the stocks mentioned.

  1. With the numbers now in, bulls are calculating Nvidia’s new price-to-earnings ratio, or how much investors are paying for future growth.
  2. “The market seems to think the Fed has cracked the code,” Amanda Agati, chief investment officer at PNC Financial Services, told ABC News.
  3. The prevailing logic was that the Federal Reserve would raise interest rates too much, causing a substantial decline in spending that would snowball into higher unemployment and an economic downturn.
  4. The Job Openings and Labor Turnover Survey showed that listings totaled 9.82 million, down from an upwardly revised 10.32 million the month before and below the FactSet estimate of 9.9 million.
  5. The Motley Fool has positions in and recommends JPMorgan Chase.

The S&P 500 and Nasdaq, meanwhile, are on pace for weekly losses of 0.9% and 0.8%, respectively. Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors. We advise you to carefully consider whether trading is appropriate for you based on your personal circumstances. This information is made available for informational purposes only. It is not a solicitation or a recommendation to trade derivatives contracts or securities and should not be construed or interpreted as financial advice.

“If the Fed does pull this off, prices could move even higher from here,” said Cox, of eToro. “When rates are lower, people feel more optimistic and are more likely to spend and invest.” Brent crude futures rose $1.79, or 2.3%, to $80.86 a barrel. West Texas Intermediate crude added $1.89, or 2.6%, to $75.45. Nvidia, Advanced Micro Devices, Micron Technology and Qualcomm rose 1% each. Both the iShares Semiconductor ETF and VanEck Semiconductor ETF added 1.3%.

The ADP data, which is often unreliable and considered more volatile than other employment data, comes ahead of Friday’s official June payrolls report. Economists are expecting 240,000 non-farm payrolls were added last month, a slowing from the 339,000 jobs added in May, according to Dow Jones. China has curbed short selling and quant trading activities to support its flailing stock markets, but the moves could dampen investor appetite. Third, despite the occurrence of several recessions since 1994, the S&P 500 returned 10.3% annually over the last three decades. Investors can assume similar returns over the next three decades even if the economy suffers a recession this year. But any attempt to time the market could backfire, setting investors up for long-term underperformance.

Dow Jones Stocks’ News

U.S. Treasury bonds are debt securities issued by the government. They pay a fixed interest rate until they mature, at which point the bondholder recoups the principal. The interest rate (or yield) is normally higher on long-date bonds as compared to short-dated bonds. However, the Treasury bond market — a recession forecasting tool with a near-perfect track record — continues to sound its most severe alarm in decades. Recessions have typically coincided with a substantial decline in the S&P 500.

Stock Market News Today, 02/20/24 – Indices Close Lower, Weighed Down by Tech

Continuing claims edged lower to 1.72 million, as both numbers pointed to a resilient labor market despite the Federal Reserve’s rate-hiking campaign. “In this environment, the FOMC needs to make policy more restrictive so we can return inflation to target in a sustainable and timely way,” Logan said in prepared remarks for a speech at Columbia University. But she still sees higher rates ahead as the Fed fights to get inflation back down to its 2% goal. Simon Property Group’s stock rose 1% Thursday before the bell following an upgrade to outperform from peer perform by Wolfe Research. The three major indexes were trading down directly following Thursday’s opening bell.

U.S. stocks end mostly up as Dow and S&P 500 score fresh record highs

All 12 sectors of the S&P 500 fell in the red during Thursday’s trading session, with the energy sector leading the losses. “We are constructive on revenue and earnings visibility given recent backlog growth, particularly in the company’s Aviation and Bell segments,” analyst Jason Gursky wrote in a Wednesday note. JetBlue Airways tumbled more than 7% a day after the company announced it would end its partnership in the northeast U.S. with American Airlines to focus on Spirit Airlines. American shares moved 2% lower, while Spirit rose more than 1%.

Bank of America announced on Wednesday evening that it is raising its quarterly dividend to 24 cents per share from 22 cents, an increase of about 9%. May’s total was revised lower to 267,000, down 11,000 from the initial estimate. The yield on the 10-year Treasury was last trading at 4.031% after jumping more than 8 basis points. The 2-year Treasury yield was last up by more than 13 basis points to 5.082%. “The company’s aggressive growth plans and substantial operating leverage should allow strong margin expansion,” Bagri said.

June’s increase was more than double the Dow Jones consensus estimate of 220,000 and far better than the downwardly revised 267,000-job addition seen in May. The average yield spread was -1.3% in January 2024, but that still represents the lowest reading since August 1981, when the average yield spread was -1.43%. In that context, Treasury bonds are doing something investors have not seen in decades. In fact, a blog post from the Federal Reserve Bank of St. Louis says the implied “recession probability would be unprecedentedly high for a false positive.” The chart below lists the start date for each yield curve inversion involving the 10-year and 3-month Treasuries since the late 1960s, and the start date of the subsequent recession. The chart also shows how much time elapsed between the two events.

Stocks making the biggest midday moves

The Job Openings and Labor Turnover Survey showed that listings totaled 9.82 million, down from an upwardly revised 10.32 million the month before and below the FactSet estimate of 9.9 million. Bitcoin touched a 13-month high of above $31,450 on Thursday as the drumbeat for institutional bitcoin demand grew louder following comments from BlackRock CEO Larry Fink. On Wednesday he told Fox Business News that bitcoin is “an international asset” and “not based on any one currency so it can represent an asset that people can play as an alternative.” Materials stocks were the second-largest losers, with the sector losing 2.1%. ConocoPhillips, Hess, Marathon Oil and Devon Energy all saw shares decline by more than 3.3%.

Economic Calendar

To quote Morgan Stanley analysts, “The U.S. economy is humming along, with nearly all data validating the soft landing.” Expectations of rate cuts, however, will not sustain an unbroken market rally over the coming days or months, analysts said. At its meeting this week, the Fed decided to leave interest rates unchanged, extending a pause of a near-historic series of rate hikes deployed to cool fast-rising prices. Going further, the Fed said it expects to impose three quarter-point interest rate cuts next year. Oil prices climbed more than 2% on Tuesday as investors monitored conflict in the Middle East and the likelihood of forthcoming U.S. interest rate cuts. Roughly 12 New York Stock Exchange-listed stocks fell for every advancer in early trading Thursday, as fears of even tighter Fed policy weighed on investor sentiment.

As for biotech stocks, Krinsky said the sector could be trying to break out. The market is feeling good about the prospects of a soft landing. All 11 sectors of the benchmark index were higher in afternoon trading, helping the index rise 0.5%. Real estate, utilities and industrials were the best performing sectors, all up about 0.8%. On the other hand, communication services posted the smallest gain with a 0.3% advance.

Sweetgreen shares rose 4% after Bank of America upgraded the stock to buy from neutral, citing increasing foot traffic, sustained momentum in same-store sales growth and long-term plans to automate operations. Private payrolls exploded in June, with job growth totaling 497,000 on the month, according to a report from payrolls processing firm ADP. Wolfe’s price target of $127 implies 7.4% upside from where shares closed on Wednesday. The Fed skips a meeting in October, but odds that rates will stand a half-point higher by the Nov. 1 meeting are now 40.1%, up from 31.6% Wednesday.

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