Daily Market Notes: 9-22-2023
After Wednesday’s post- Fed announcement bearish downside turnaround, the market did not have a chance yesterday, as the major indices opened lower and just kept sinking with an awful market on close further selloff, which could have been mutual funds liquidating and the market makers lowering their bids to accommodate the selling.
The Dow opened lower and just kept dropping as the session moved along and ended down by 370 to 34,070 as CAT, CRM, GS, HD and MCD were the major villains, which were many. In fact, only 2 of its 30 members ended higher.
The S&P did even worse with a huge 72 point collapse, which was its worst day since March to end at 4330 as the large technology members were another disaster, along with most others. It is now back to where it was in June.
The Nasdaq really got clocked to the tune of 245 points to 13,223 on technology weakness and the Russell 2000 Index of small stocks also did poorly with a 28 point decline down to 1782.
The VIX loved this and rose to 17.54 to its highest level in a month.
And the new bugaboo is the persistence of higher interest rates after the Federal Reserve said that it may cut interest rates next year by just half of what it had earlier predicted. The Fed has already hiked its main interest rate to levels unseen since 2001, which helps slow inflation but at the cost of hurting investment prices.
High-growth stocks are typically among the hardest hit by high rates, and as mentioned those large ones took the brunt of the pain for a second straight day as stock prices tend to fall when rates rise because stocks are riskier investments. Why stomach the chance of their big swings when Treasurys are paying more in interest than before with risk-free rates at their highest level in many years.
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Donald M. Selkin
Chief Market Strategist
Don Selkin is the Chief Market Strategist at Newbridge Securities Corporation, member FINRA/SIPC and provides the Fair Value analysis for CNBC each morning. The commentary provided in this Market Letter is intended to provide our current or potential customers with timely market analysis and should not be considered a research report. This Market Letter may contain, and is limited to: Discussions of broad based indices; Commentaries on economic, political or market conditions; Technical analysis concerning the demand and supply for a sector, index or industry based in trading volume and price; Statistical summaries of multiple companies’ financial data, including listings of current ratings; and, recommendations regarding increasing or decreasing holdings in particular industries or securities. This Market Letter does not make a financial or investment recommendation or otherwise promotes a product or service of the firm. This Market Letter contains only news, facts, and commentary on information previously reported from a news source believed to be accurate and reliable by the author. These news sources include the following: {Bloomberg Financial, Reuters, and Associated Press}. It is possible that at any given point in time, the author, Newbridge Securities, or one or more of its employees or registered individuals associated with Newbridge Securities, may hold a position, either long, or short, as well as options, bonds or other instruments in the companies mentioned in this report.