Benzinga - by Shanthi Rexaline, Benzinga Editor.
Battered stocks could leave behind the ravages seen in Tuesday’s session and strive to stage a rebound, although Treasury yield and economic data could be overriding influences on the market. Crude oil prices are heading northward, and persistently high prices has the potential to aggravate inflation worries, given the Federal Reserve’s hawkish stance. Traders could also take cues from the durable goods orders report due ahead of the market open.
Cues From Tuesday’s Trading:
Stocks ended Tuesday’s session notably lower as interest rate worries and elevated bond yields generated selling pressure. Minneapolis Fed President Neel Kashkari set off worries by hinting at more rate hikes down the line, while economic data on the housing market and consumer confidence came in a touch soft.
The averages opened lower and continued to languish below the unchanged line throughout the session before ending with losses of over 1% each.
The tech-heavy Nasdaq Composite Index settled at a four-month low, while the S&P 500 Index and the Dow Industrials ended at their lowest levels since early June.
The market witnessed broad-based weakness, with utility and consumer discretionary stocks getting battered in the session.
US Index Performance On Tuesday
| Index | Performance (+/-) | Value |
| Nasdaq Composite | -1.57% | 13,063.61 |
| S&P 500 Index | -1.47% | 4,273.53 |
| Dow Industrials | -1.14% | 33,618.88 |
| Russell 2000 | -1.27% | 1,761.61 |
Analyst Color:
The stagflationary set up has led to a 40% spike in the VIX in September and “we will see volatility through the end of the year, said Alex McGrath, Chief Investment Officer for NorthEnd Private Wealth. “Elevated yields will serve as a headwind to equities through the end of the month and perhaps the end of the year as the risk free rate of return continues to bludgeon the high multiples of the ‘Sisyphus Seven’ that rolled the market up the hill in 2023,” he said.
The UAW strikes and the likelihood of a government shutdown will only serve as ancillary drags on investor sentiment while not broadly effecting the performance of the markets, the analyst said. He sees inflation remaining high as oil has begun to rally, the bond yields remain elevated, credit card balances surge and student loan payments go live in October, he added.
Futures Today
Futures Performance On Wednesday
| Futures | Performance (+/-) |
| Nasdaq 100 | +0.42% |
| S&P 500 | +0.40% |
| Dow | +0.29% |
| R2K | +0.35% |
In premarket trading on Wednesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) rose 0.39% to $427.54 and the Invesco QQQ ETF (NASDAQ:QQQ) gained 0.42% to $355.70, according to Benzinga Pro data.
Upcoming Economic Data:
The Commerce Department is due to release its durable goods orders report for August at 8:30 a.m. EDT. Economists, on average, expect durable goods orders to have fallen 0.5% month-over-month, slower than the 5.2% slide in July. Core durable goods orders may have risen 0.1% in August compared to a 0.5% increase in July.
The Energy Information Administration will release its weekly petroleum status report at 10:30 a.m. EDT.
The Treasury will auction five-year notes at 1 p.m. EDT.
Stocks In Focus:
- Costco Wholesale Corp. (NASDAQ:COST) fell about 2% in premarket trading following the release of its quarterly results.
- Progress Software Corp. (NASDAQ:PRGS) declined more than 4%, as the stock reacted to the company’s earnings release.
- Meta Platforms, Inc. (NASDAQ:META) could be in focus ahead of its two-day Meta Connect conference that kickstarts Wednesday.
- Paychex, Inc. (NASDAQ:PAYX) is due to report its quarterly results ahead of the market open.
- Those reporting after the close include H.B. Fuller Company (NYSE:FUL), Micron Technology, Inc. (NASDAQ:MU) and Worthington Industries, Inc. (NYSE:WOR).
Crude oil futures rallied 1.70% to $91.93 in early European session on Wednesday following a 0.79% gain on Tuesday.
The yield on the benchmark 10-year Treasury note fell 0.049 points to 4.509% on Wednesday.
Most Asian markets staged an uneasy recovery on Wednesday, as the bargain hunting following their recent weakness generated some strength. Industrial profit data out of China, showing a slower pace of decline for the Jan-August period, also lent some support.
European stocks showed tentativeness and were lower by late-morning trading on Wednesday.
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