Rising Treasury yields put pressure on stocks 24/10/2024

HOT stories for today

Stocks on the move:

• Boeing (BA) machinists rejected a new labor deal, which included a 35% wage increase over four years, extending their strike that has halted most aircraft production for over five weeks in the Seattle area. The company may continue to struggle with cash flow next year as it faces the challenges of ramping up production post-strike and dealing with regulatory scrutiny.
• Meanwhile, AT&T (T) exceeded expectations by adding more mobile subscribers in the third quarter, extending its recent momentum. 
• Coca-Cola (KO) saw its stock drop as investors questioned how much longer the company can raise prices without boosting beverage sales.
• In other news, Spirit Airlines (SAVE) is reportedly in talks with Frontier Group about potentially filing for bankruptcy to enable a takeover by the rival low-cost carrier.

Markets & today's action:

• Asia-Pacific markets mostly declined on Thursday following a sharp drop in U.S. stocks overnight, where the Dow Jones Industrial Average had its worst day in over a month. In Asia, South Korea narrowly avoided a technical recession with its third-quarter GDP inching up by 0.1% quarter-on-quarter, following a 0.2% contraction in the second quarter.
• In the U.S., all three major indexes fell, with the Dow and S&P 500 recording their third consecutive losing session, weighed down by rising Treasury yields. The S&P 500 slipped 0.92%, the Dow dropped 0.96%, and the Nasdaq Composite fell 1.6%. The Federal Reserve's ‘Beige Book’ indicated "limited" layoffs and a slightly more optimistic economic outlook, noting that overall activity has been relatively flat over the past seven weeks as consumers became more price-sensitive and manufacturing weakened.
• Looking ahead, key earnings reports from companies like United Parcel Service, Honeywell, Northrop Grumman, Southwest Airlines, and American Airlines are expected before the market opens on Thursday. Additionally, economic data releases, including weekly jobless claims, new home sales, and building permits, are scheduled for later in the day.

Watchlist for today: BA, TSLA, IBM, UNP, HON, UPS, KKR

Bitcoin

• Bitcoin has seen a noticeable decline of over 3.7% in the last few days, following a recent surge to a 12-week high. After briefly surpassing its 2021 peak of $69,000, the cryptocurrency has faced increased selling pressure, leading many to worry that a deeper correction may be on the horizon.  The price rally brought the majority of Bitcoin holders back into profit, sparking concerns that continued profit-taking could push prices even lower. According to market insights, only a small fraction of investors remained at a loss, with most enjoying gains as Bitcoin hovered around $67,000.
• Adding to the market tension, open interest in Bitcoin derivatives recently reached record levels, signaling heightened activity as the cryptocurrency approached the critical $70,000 threshold. Many are now wondering whether this surge in interest will lead to more volatility in the near future.
  Watchlist: Bitcoin: 65,200-69,780, Ethereum: 2530-2780, Solana: 160.00-172.50

Forex

• The Japanese Yen (JPY) gained some traction on Thursday after verbal intervention from officials, partially recovering from its recent losses. A slight pullback in the U.S. Dollar (USD) also helped push the USD/JPY pair down from its Wednesday peak near 153.20. However, further Yen gains may be limited due to doubts about the Bank of Japan’s ability to raise interest rates amid election uncertainty.
• Similarly, the EUR/USD pair saw a modest recovery during the Asian session, snapping a three-day losing streak and climbing closer to 1.0800, supported by a dip in the USD. However, caution remains due to uncertain fundamentals.
  Whatchlist: EUR/USD: 1.0780-1.0900, USD/JPY: 150-153.50

Basic Materials

• Crude oil futures ended their two-day winning streak, dropping over 1% due to a significant increase in U.S. stockpiles. U.S. crude fell by 97 cents, closing at $70.77 per barrel, while global benchmark Brent lost $1.08, finishing at $74.96 per barrel. The Energy Information Administration reported that U.S. crude stockpiles rose by 5.5 million barrels last week, with gasoline inventories also up by 900,000 barrels. The report did little to spark buying interest, especially with prices already trending downward. The increase in stockpiles only added to the downward pressure on oil prices, making buyers hesitant to re-enter the market.
• Gold prices (XAU/USD) saw a significant intraday reversal on Wednesday, plunging around $50 after touching a fresh all-time high near the $2,760 level. The metal's overbought conditions on the daily chart, combined with rising U.S. Treasury yields and a strengthening U.S. Dollar, triggered a wave of profit-taking in the non-yielding asset. However, political uncertainty ahead of the November 5 U.S. presidential election, along with escalating tensions in the Middle East, provided support, helping to halt the downward correction and keep prices above the $2,700 threshold.
  Watchlist: GOLD 2680-2760, US Oil: 68.60-72.50

The TEFS Analyst team wishes you a successful day!