Stocks Trade Off Lows in Run-Up to Powells Speech on Wednesday
Despite the fact that the stocks Trade market has retreated from all-time lows in the run-up to Federal Reserve Chairman Jerome Powell’s speech on Wednesday, investors are still seeking a reason to believe that the Fed is on the cusp of changing its monetary policy outlook. Among other things, the markets have begun to price in the likelihood of a rate hike in September.
Stitch Fix’s stock slid 5.9% in premarket trading
Personalized shipments of clothes, shoes, and accessories are the name of the game for Stitch Fix (SFX), which combines data science with human judgment. Its latest numbers showed revenues in the three months ended in July were up slightly to $481.9 million, but they were slightly lower than expected. The company’s active clients are up by 273K.
Stitch Fix will announce its fiscal Q4 results on September 20. It’s not hard to imagine the company squeezing in a kitchen sink quarter. It ended the quarter with $212 million in cash. The company expects to report sales in the range of $455 million to $465 million in the current quarter. In addition, it has $197 million in inventory.
Bitcoin’s 10% weekly drop puts bears in control
During last week’s market slide, BTC briefly dropped below $20,000. The drop put the bears in the driver’s seat. This has set the stage for the bearish momentum to pick up again tomorrow when Fed Chair Jerome Powell speaks.
In the short term, BTC could fall back to its June lows. This would set the stage for a retest of $19,230 over the coming weeks. However, if Powell’s speech is positive, BTC could soar.
BTC has recently broken its support at $20,000. The daily technical chart has turned bearish. However, there is still time for BTC to climb back up to $14,000 – $16,000 range.
Investor sentiment for the S&P 500(r) Index is near two standard-deviations oversold
Using the data presented above, it is apparent that sentiment for the S&P 500(r) Index is near two standard-deviations oversold. This suggests that investors are largely bearish about the outlook for the economy and the market. This sentiment is reflected in the market’s relative strength index, which measures the inner momentum of a security.
The BofA Global Fund Manager Survey reveals that more than one-third of traders believe the economy will experience a recession within the next 12 months. Despite the bearish sentiment, the market is still in a bullish momentum wave. This is because the average stock has gained 19.5% since October.
Global equity funds had outflows of $5.1 billion in the week through Aug. 24
Despite a surprisingly stout performance from the Nasdaq and Dow Jones industrial averages, stock markets in the region took a hit after Federal Reserve Chairman Jerome Powell’s Friday speech. The S&P 500’s (SPX) blue chip index and Nasdaq 100 (NASDAQ) lost around 4% each. The S&P/BMV IPC (MEXBOL) fell 0.95% while the Dow Jones Industrial Average (DJIA) lost 2.03%.
The best way to tell if the markets are in for a rough ride is to check the number of trading days in the past two weeks. The number isn’t too dissimilar to the rest of the world. The US market is particularly resilient to negative interest rates due to its solid labor and housing markets. But it’s still prudent to take advantage of a low rate environment, as long as you don’t expect it to last.
Consumer spending rose less than expected as a key inflation metric turned negative
Despite a positive increase in consumer spending, the core personal consumption expenditures price index declined slightly in October. Core PCE is used by the Federal Reserve to calculate its 2% inflation target. It is also the basis for calculating the government’s inflation target.
The personal savings rate dropped from a rate of 5.0% in July to 3.5% in August. The saving rate is now near its lowest level in nearly six years. The Federal Reserve last week raised interest rates to a range of 3.75% to 4%.
The Fed signaled that it will continue to raise interest rates in the coming months. A strong labor market is expected to continue to support economic growth through the rest of the year. However, stubbornly high inflation could limit growth this quarter.
Wall Street is looking for any reason for a dovish read
During the two day policy meeting of the Federal Reserve, stocks awaited word from their central banker on how many more times they will be bumped up to a higher interest rate. The market spent most of the day trading lower.
During the meeting, the Fed Chairman, Jerome Powell, made a few statements that caught on with investors. He made some interesting claims, but did not do much to actually prove them.
The most interesting gimmick was his claim that he knew the exact time the Federal Open Market Committee (FOMC) would raise rates. The FOMC raised rates 75 basis points. The S&P 500 Index fell 2.5%, the Nasdaq fell 3.4%, and the SPDR S&P 500 ETF Trust SPY traded higher.