Oct 27, 2022
TradeUP Thursday
Latest news and bulletin updates
Market Trends
Dow Jones  up
S&P 500  up
(Opening price as of 10/27/2022 compared to last close)
Weekly Highlights
#1 US GDP grows 2.6% in Q3, better than expected as growth turns positive
#2 Meta shares plunge 23% on missed earnings and big spending on metaverse
#3 Twitter stock to be suspended on NYSE as Musk nears takeover deal
#4 McDonald’s gains 2% after beating expectations in Q3
Share Your Thoughts:

Stocks rally on signs of less hawkish Fed, what’s next?

All three major US stock indices ended near session highs in more than a month. A decline in bond yields and dollar strength contributed to the latest gains. The yield on the benchmark 10-year Treasury note was last down by around 9 basis points at 4.012%. The dollar weakened, with the DXY Index sliding below 110 for the first time since September.

Stocks have gotten a boost in recent days, lifted by hopes that the Fed may reduce the pace of interest rate hikes in December. Investors are assessing corporate earnings and economic data for further clues into the health of the US economy. While a 75-basis-point hike next week is fully priced, traders expect less than 50% chance of an increase of that size in December, a significant decrease since last week.

The market is betting a Fed pivot and expecting that Powell might give dovish guidance in the November meeting. This is due to recent softening tones from Fed officials, as well as top Senate Democrat (Senate Banking Committee Chair, Sherrod Brown) warning the Fed to slow down the pace of rate hikes. We can expect a further market rally if Powell turns dovish, but is this simply wishful thinking for investors?

The midterm elections will take place a week after the next Fed meeting. If Powell follows advice from Democrats and leaves a market rally after the policy meeting, it will certainly help the Democrats in elections. It is also highly possible that Republicans will call him to Capitol Hill for endless hearings. As a public Republican himself, there is no benefit for Powell to give dovish guidance next week. Furthermore, Powell has already nodded to the market turbulence and recession risks following aggressive rate hikes and higher borrowing costs for the purpose of taming inflation.

What do you think will happen after the next Fed meeting?

A.Further market rally as Powell gives dovish guidance that the market has long hoped for B.A steep market slump as Powell extends his hawkish tones C.Unchanged as the market has already priced in what to expect from Powell
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Inside Scoop

#1. US GDP grows 2.6% in Q3, better than expected as growth turns positive

• The US economy posted its first period of positive growth for 2022 in the third quarter. 

• GDP increased at a 2.6% annualized pace through September, higher than the Dow Jones estimate of 2.3%.

#2. Meta shares plunge 23% on missed earnings and big spending on metaverse

• The company reported its second consecutive quarterly decline.

• Meta’s Reality Labs division, which houses its VR headsets, lost over $9 billion in the first three quarters.

#3. Twitter stock to be suspended on NYSE as Musk nears takeover deal

•Musk visited Twitter’s headquarters in San Francisco on Wednesday and updated his profile bio to “Chief Twit.”

• The judge gave Musk until 5PM EST Friday to complete the deal after she postponed the original trial dates.

#4. McDonald’s gains 2% after beating expectations in Q3

• Worldwide, the company’s same-store sales climbed 9.5%, beating StreetAccount estimates of 5.8% growth.

• McDonald’s said traffic is growing in its US restaurants even after raising prices, in contrast to other fast-food chains that recently hiked menu prices.

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