Market Summary
On Wednesday, the S&P 500 Index ($SPX) (SPY) closed down by 0.28%. The Dow Jones Industrial Average ($DOWI) (DIA) fell by 0.37%, and the Nasdaq 100 Index ($IUXX) (QQQ) was down 0.31%. Additionally, December E-mini S&P futures (ESZ25) decreased by 0.27%, while December E-mini Nasdaq futures (NQZ25) dropped by 0.34%.
Market Factors
After initially gaining, stock indexes declined as rising bond yields led to long liquidation in equities. The 10-year T-note yield increased by 4 basis points to a 2.5-week high of 4.15%, driven by hawkish comments from the Fed and a rise in new home sales.
Positive Influences
Chip manufacturers showed strength, supporting the stock market, while a 2% increase in WTI crude oil prices bolstered energy sectors. Additionally, optimism in AI infrastructure stocks was favorable after Alibaba announced plans to expand its AI expenditure beyond $50 billion.
Mortgage Applications and New Home Sales
In the week ending September 19, mortgage applications in the US rose by 0.6%, with the purchase and refinancing sub-indices increasing by 0.3% and 0.8%, respectively. Meanwhile, August new home sales unexpectedly surged by 20.5% month-over-month to a 3.5-year high of 800,000, surpassing expectations for a decline.
Corporate Earnings Outlook
Corporate earnings expectations remain optimistic, with over 22% of S&P 500 companies projecting Q3 earnings that may exceed analyst forecasts, the highest rate in a year. Earnings growth for Q3 is anticipated to be 6.9%, up from earlier estimates of 6.7%.
Upcoming Market Focus
This week, markets are paying close attention to trade and tariff developments. Initial unemployment claims are expected to rise slightly, and other economic indicators such as capital goods orders and existing home sales are anticipated to show a decline. A 92% chance of a 25 basis point rate cut at the next FOMC meeting is currently being priced in.
International Markets and US Stock Movers
On the international front, stock markets were mixed, with the Euro Stoxx 50 down by 0.14% and China’s Shanghai Composite up by 0.83%. In US trading, Freeport-McMoRan saw losses exceeding 16% after declaring force majeure on copper supplies, while chip stocks generally performed well, with Marvell Technology up by 7% on a new share repurchase program.
