The equity market looks poised to have a bit of a struggle at today’s open, and there are many reasons to choose from to argue why that is.
- The 10-yr note yield topped 5.00% in overnight trading.
- Israel is stepping up its air strikes on Hamas and the New York Times reports that Israel is dealing with increasing attacks from Hezbollah out of Lebanon.
- There are some technical jitters with the S&P 500 closing below its 200-day moving average on Friday.
- Apple (AAPL) is down 1.2%, contending with reports that supplier Foxconn is facing a tax probe by Chinese authorities and that iPhone 15 sales in China are happening at deep discounts.
- There are reports that the Bank of Japan might review its yield curve control policy when it meets October 31, raising worries about additional fund flow pressures on the Treasury market.
- House business remains at a standstill with the GOP unable to elect a new Speaker. Nine GOP candidates have declared their interest in the Speaker position following Jim Jordan’s (R-OH) failed bid last week.
- Bloomberg reports that subprime auto loans at least 60 days past due is the highest on record going back to 1994.
We suppose one could add in some reservations in front of earnings results this week from Microsoft (MSFT), Alphabet (GOOG), Amazon.com (AMZN), and Meta Platforms (META), and key economic releases in the form of the Advance Q3 GDP Report and the September Personal Income and Spending Report, as additional factors curtailing the buying interest.
Whatever the case may be, there hasn’t been a rush to buy last week’s losses — or the losses registered since the end of July when the 10-yr note yield stood at 3.95%.
Currently, the S&P 500 futures are down 17 points and are trading 0.5% below fair value, the Nasdaq 100 futures are down 56 points and are trading 0.4% below fair value, and the Dow Jones Industrial Average futures are down 153 points and are trading 0.5% below fair value.
Things had been worse despite a spate of M&A activity that has featured Chevron (CVX) buying Hess Corp. (HES) for $53 billion, or $171.00 per share, in an all-stock deal. There has been some improvement in recent action, though, that has coincided with the 10-yr note yield running into resistance on a second test of the 5.00% level.
The 10-yr note yield is currently at 4.97%, up five basis points from Friday’s settlement but down five basis points from its overnight high.
How much the stock market keeps following this bouncing ball remains to be seen, as there are a lot of balls up in the air to start the week.
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Originally Posted October 23, 2023 – No rush to buy weakness as 10-yr yield flirts with 5.00%
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