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Market Update 10/23/23

Hashim Effendi

Markets declined between Oct. 17 and Oct. 23 as investors remained pessimistic of an elevated Federal funds rate in the near term.

The three indexes closed mixed on Tuesday due to strong economic data paired with a rise in treasury yields. The Dow Jones Industrial Average added 13.1 points, the S&P 500 lost 0.43 points and the Nasdaq composite lost 0.3%.

The Chicago Board Options Exchange Volatility Index serves as a gauge for investor sentiment regarding the state of the equity markets. The CBOE Volatility Index rose 3.9% to $17.88.

The Department of Commerce announced that retail sales climbed 0.7% month over month for September, which exceeded the consensus estimate of 0.3%.

The 10-Year U.S. Treasury Note yield reached 4.8%, and yields continue to climb as investors remain pessimistic regarding the short-term outlook on elevated interest rates.

The Energy Select Sector and the Materials Select Sector each rose 1.0%.

Markets closed lower on Wednesday as investors remained convinced that the Federal Reserve would maintain the current interest rate environment for an extended period. The Dow retracted 1.0%, the S&P 500 retracted 1.3% and the Nasdaq retracted 1.6%.

The yield on the 10-Year U.S. Treasury Note reached 4.92%, the first time the benchmark yield surpassed 4.9% since 2007.

Short-term yields have also been rapidly climbing, with the 2-Year Treasury reaching 5.22% for the first time since 2006.

The Materials Select Sector, the Consumer Discretionary Select Sector and the Industrials Select Sector declined 2.6%, 2.4% and 2.4%, respectively.

The CBOE Volatility Index added 7.5% to $19.22.

The three indexes closed in the red on Thursday due to comments from Fed Chair Jerome Powell. The Dow fell 0.8%, the S&P 500 fell 0.9% and the technology-heavy Nasdaq fell 1.0%. 

The Consumer Discretionary Select Sector and the Real Estate Select Sector lost 2.7% and 2.5%, respectively.

“Above-trend growth, or that tightness in the labor market is no longer easing, could put further progress on inflation at risk and could warrant further tightening of monetary policy,” Powell mentioned at the Economic Club of New York.

The Department of Labor announced that jobless claims declined by 13,000 to 198,000 for the week ending Oct. 14.

Markets closed lower on Friday as investors remained apprehensive of the Fed’s potential decision to continue hiking interest rates. The Dow lost 0.9%, the S&P 500 lost 1.3% and the Nasdaq lost 1.5%.

By Monday’s close, the three indexes remained mixed. The Dow declined 0.6%, the S&P 500 declined 0.2% and the Nasdaq gained 0.3%.

Investors should remain vigilant of fluctuations in treasury yields, which tell of forthcoming developments in the equity markets.

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