Stock Markets This Week (US): Why Did Nasdaq Fall 6% This Week?
Stock Markets This Week (US)
All the major indices closed the week with losses after the Fed's rate hike. The Dow declined by 1.4%, ending four weeks of gains. The S&P and NASDAQ tumbled 3.35% and 5.65%, respectively, to break their two-week winning streaks.
US Markets This Week: Stock Market Movement
The US market slipped on Monday - the last day of the month. Despite the fall, Dow capped off its best month since 1976, and other major indices snapped a two-month losing streak. Investors looked forward to hiking interest rate hikes by the Fed and the earnings from some top companies.
On Tuesday, the US market continued to slip down as investors assessed better-than-expected economic data and prepared for another large rate hike. The market opened higher but turned negative after the job opening in September showed a resilient labor market.
The US market crashed on Wednesday after the Federal Reserve said that the inflation is still high and indicated that the central bank has more rate hikes planned. Major indices fell up to 3.3% as the Fed increased the rate by 75 basis points.
The US market fell for the fourth consecutive day on Thursday. Yields spiked as investors digested the latest decision by the Fed, putting pressure on equities. The yield on the 2-year treasury note hit its highest level since 2007, while the 10-year Treasury yield popped over 4%.
On Friday, US stocks ended higher as investors assessed monthly employment figures that did little to thwart the likelihood of more aggressive monetary tightening. All the major indices closed over a percent higher. The company continued to report its quarterly results.
US Stock Market This Week: Major Events
Quarterly results: Some big names reported their quarterly results this week. Airbnb shares tanked post the result announcement, though the company reported decent numbers. AMD reported a 29% jump in its revenue, while the net income declined. Uber revenue a 72% jump in its quarterly revenue and a 14% increase in its Monthly Active Users.
US Markets have performed much better in the quarter-to-date compared to the week-to-date. Except for Nasdaq, the other two indices have gained, with the Dow Jones gaining as much as 12.8%. Disappointing quarterly performance by the Big Tech firms which make up a huge part of the Nasdaq was one of the major contributing factors to the negative returns of the index in both the quarter-to-date and the weekly performance.
(Source: Edward Jones)
Fed's rate hike: Federal Reserve increased the interest rate again by 75 basis points. The Federal Reserve also said that they will have to increase the rates further to bring inflation under control - the terminal point is not yet reached. Also, there is still a possibility of a soft landing, but the path has narrowed. Future rate hike decisions will depend on the totality of incoming data and their implications for the outlook of economic activity.
US payrolls increase: The US economy added more jobs than expected in October. Non-farm payrolls increased by 261000 against 195000 expected. Unemployment came at 3.7% against estimates of 3.6%. Average hourly earnings increased by 0.4% compared with the 0.3% expectation. These labor figures reflect a solid labor market and healthy wage gains for consumers, they do little to deter the Fed from pushing forward with its rate-hiking campaign.
Treasury yield: US Treasury yields increased through most of the week, with short-term rates climbing more than yields on long-maturity bonds. The two-year US Treasury yield reached a 15-year high above 4.75% at this point this week. The 10-yr treasury yield increased by 0.1% in the week to close at 4.16%.
How much did the Fed increase the interest rate in November?
The Federal Reserve increased the interest rate by 75 basis points this week.
How much more rate hike is expected from the Federal Reserve?
The market expects that the peak fed funds rate would be around 5.0%-5.3% and it will happen in the first half of 2023.
How has the labor market performed in October?
The job count increased by 261,000 in October, above expectations of an increase of 200,000.