Zinger Key Points
- The economy is walking a tightrope pretty well, which may continue for the rest of the year, says an analyst.
- Fed Governor Lisa Cook warns of potential shocks that could exacerbate vulnerabilities in the global financial system.
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U.S. stocks experienced a drop as of midday trading in New York, potentially ending a prolonged streak of consecutive daily gains as investors evaluate the economic outlook.
Commodity prices continued to weaken on Wednesday, with crude oil prices declining to as low as $75 per barrel, approaching levels last seen in mid-July.
Traders sought refuge in bonds, with Treasury yields declining across the curve. The popular iShares 20+ Year Treasury Bond ETF TLT surged by 1.2%, reaching its highest level since late September.
A speech by Federal Reserve Chair Jerome Powell lacked any mention of monetary policy or economic-related remarks, leaving investors disappointed.
Cues From Wednesday’s Trading
The S&P 500 Index eased 0.3%, after posting its seventh straight session of gains on Tuesday.
The tech-heavy Nasdaq 100 was 0.4% lower, on track to snap its eight-day winning streak.
Blue-chip stocks in the Dow Jones Industrial Average were also 0.4% lower, while small caps in the Russell 2000 tumbled 1.3%.
US Index Performance On Tuesday
| Index | Performance (+/-) | Value |
| Nasdaq 100 | -0.40% | 15,234.82 |
| S&P 500 Index | -0.32% | 4,362.17 |
| Dow Industrials | -0.42% | 34,032.73 |
| Russell 2000 | -1.33% | 1,710.12 |
Analyst Color: Brad McMillan, chief investment officer for Commonwealth Financial Network, said he sees several tailwinds ahead that could prove positive for the market. “Growth is slower but still healthy; Rates are down, but so is inflation; Earnings are up, and valuations have stabilized,” he said.
The economy is walking that tightrope pretty well, which may continue for the rest of the year, the analyst said. “Looking back, we have seen a tough couple of months, but it's possible that the coming months could be better,” he added.
Wednesday Trading In Major US Equity ETFs
- The SPDR S&P 500 ETF Trust SPY was 0.3% lower to $435.44.
- The SPDR Dow Jones Industrial Average ETF DIA fell 0.3% to $340.44.
- The Invesco QQQ Trust QQQ fell 0.4% to $371, according to Benzinga Pro data.
Looking at S&P 500 sector ETFs:
- The Real Estate Select Sector SPDR Fund XLRE and the Technology Select Sector SPDR Fund XLK were the only two sectors marginally in the green, up 0.1%.
- The Energy Select Sector SPDR Fund XLE was the laggard, as oil prices sold off.
Upcoming Economic Data:
“We must remain vigilant to potential shocks that could exacerbate vulnerabilities in the global financial system,” Fed Governor Lisa Cook said in her prepared remarks to the Central Bank of Ireland. She highlighted several risks, including asset valuation pressures, financial sector leverage, funding risks, the Chinese economic slowdown and the geopolitical risks surrounding the conflict in the Middle East and the Russia-Ukraine war.
The Mortgage Bankers Association reported that application rose 2.5% in the week ending Nov.3, ending three weeks of declines. The 30-year average mortgage rate fell 25 basis points to 7.61%, marking the sharpest weekly fall in more than a year.
New York Fed President John Williams is due to speak at 1:40 p.m. ET.
Fed Vice Chair for Supervision Michael Barr is due to speak at 2 p.m. ET followed by Fed Governor Philip Jefferson at 4:45 p.m. ET.
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Stocks In Focus:
- Warner Bros. Discovery, Inc. WBD tumbled 16% as the company missed Street earnings estimates. Peer company Paramount Global PARA fell 7.6%.
- Other stocks moving on earnings news are: Maravai LifeSciences Holdings, Inc. MRVI (down 30%) Robinhood Markets Inc. HOOD (down 13%), Lucid Group, Inc. LCID (down about 10%), Upstart Holdings, Inc. UPST (down nearly 27%), GoPro Inc. GPRO (up 13%), Roblox Corporation RBLX (up 14%), eBay Inc. EBAY (down over 4%), The New York Times Company NYT (up 7.5%), Rivian Automotive, Inc. RIVN (down over 4%) and New Fortress Energy Inc. NFE (up 15%).
- Those reporting after the close include Affirm Holdings, Inc. AFRM, HubSpot, Inc. HUBS, Instacart CART, Beyond Meat, Inc. BYND, AMC Entertainment Holdings, Inc. AMC, Luminar Technologies, Inc. LAZR, Viasat, Inc. VSAT, MGM Resorts International MGM, Disney, Virgin Galactic Holdings, Inc. SPCE, Lyft, Inc. LYFT, Take-Two Interactive Software, Inc. TTWO and Walt Disney Co. DIS
Commodities, Bonds, Other Global Equity Markets:
Crude oil fell 2.5%, with a barrel of WTI-grade crude trading at $75. The United States Oil Fund ETF USO was 2.8% lower to $69.83.
Treasury yields were lower, with the 10-year yield down by 4 basis points to 4.52% and the 30-year yield down by 7 basis points to 4.66%.
The dollar rose, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP up 0.2%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.2% lower to 1.0700.
European equity indices closed in the green. The SPDR DJ Euro STOXX 50 ETF FEZ rose 0.7%.
Gold fell 0.8% to $1,953/oz, while silver rose 0.36% to $22.70. Bitcoin BTC/USD was 0.4% lower to $35,293.
Staff writer Piero Cingari updated this report midday Wednesday.
Photo via Shutterstock.
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